Issues
Early last week was fairly quiet as stocks went mostly nowhere until anxiety ramped higher on Friday on tensions rising in the Middle East. By week’s end the S&P 500 had fallen 0.4%, the Dow had lost 1.3%, and the Nasdaq declined by 0.6%.
We had written lately that the market had been extremely quiet in recent weeks ... possibly a bit too quiet, as the market has a way of hitting a pothole after a period of calm. Sure enough, we saw some growth stocks ease early last week, and then the Middle East attacks and counterattacks caused selling on Friday. Even so, it’s been a normal wobble so far, and while things are likely to be tricky and news-driven in the near term based on the happenings in the Middle East, just about all of the intermediate-term evidence remains bullish. We’ll leave our Market Monitor at a level 7 today.
This week’s list is surprisingly growth-y, with many names from different sectors at or threatening new high ground. Our Top Pick looks to be near a decent entry after a humongous rally from early April to late May.
This week’s list is surprisingly growth-y, with many names from different sectors at or threatening new high ground. Our Top Pick looks to be near a decent entry after a humongous rally from early April to late May.
The market remains in decent shape despite an onslaught of potential landmines, including the new conflict in the Middle East, worsening unrest domestically and the July 9 deadline on the 90-day tariff pause for some 130 countries fast approaching. It’s not raining, but dark clouds are forming, so it’s worth bringing a poncho with you the next time you leave the house (so to speak). Today, we go with what’s working, and that’s energy, as oil prices have gotten an immediate boost from the sudden Israel-Iran war. Fortunately, Cabot Dividend Investor Chief Analyst Tom Hutchinson has one of the best-performing energy-related stocks out there, and one that pays a nice dividend to boot. It’s the newest addition to the Stock of the Week portfolio.
Details inside.
Details inside.
Early last week was fairly quiet as stocks went mostly nowhere until anxiety ramped higher on Friday on tensions rising in the Middle East. By week’s end the S&P 500 had fallen 0.4%, the Dow had lost 1.3%, and the Nasdaq declined by 0.6%.
Early last week was fairly quiet as stocks went mostly nowhere until anxiety ramped higher on Friday on tensions rising in the Middle East. By week’s end the S&P 500 had fallen 0.4%, the Dow had lost 1.3%, and the Nasdaq declined by 0.6%.
The top-down evidence couldn’t be much better, with our Cabot Trend Lines joining our intermediate-term measures on the bullish side of the fence, while the market’s action over the past two months portends big gains down the road. That said, we’re still waiting for more growth names to liftoff--so far, growth is up but at a moderate pace, and many names are still battling with old resistance. Not to repeat ourselves, but we’re optimistic more names will kick into gear, but we don’t want to get too far in front of our skis before then. We’re doing a tiny add-on buy tonight, but will still be holding 28% in cash and looking for new leaders to hop on board.
It looks like the president’s tariffs are beginning to show some effect on inflation. The latest CPI report showed that the inflation rate—while lower than the 2.5% economists had expected—crept up to 2.4% from April’s 2.3% rate. Core inflation—excluding food and energy—rose 2.8%, the same as April’s increase.
The number was helped by drops in apparel and automobile prices.
The unemployment rate remained stable at 4.2%. The ADP employment number was just 37,000, the lowest level since March 2023, and less than the 111,000 anticipated.
The number was helped by drops in apparel and automobile prices.
The unemployment rate remained stable at 4.2%. The ADP employment number was just 37,000, the lowest level since March 2023, and less than the 111,000 anticipated.
Stocks have made an impressive recovery from the April tariff swoon. The S&P 500 is now within just 2% of the all-time high.
The recent market overreactions have been reversed. The market index is perched near the high. It’s tough to envision a catalyst that will drive a sustained rally anytime soon. Sure, there could be good tariff news. But uncertainty is likely to linger for a while. The economy is okay but not great. A recession is unlikely, but growth is still slowing.
Anything can happen, of course. But it’s time to acknowledge the possibility that the market could go sideways for the rest of the year and even beyond.
Dividends are king during times like this. Dividends roll in no matter what the market is doing or what’s going on in the world. Dividend income has accounted for a substantial portion of total market returns over time, about 34% since 1940. But dividends account for a much higher percentage of returns during periods of flat markets. While overall stock prices are stuck in the mud, the cash register keeps ringing.
In this issue, I highlight one of the very best income stocks on the market. It has a strong recent track record and is poised to thrive in the quarters ahead.
The recent market overreactions have been reversed. The market index is perched near the high. It’s tough to envision a catalyst that will drive a sustained rally anytime soon. Sure, there could be good tariff news. But uncertainty is likely to linger for a while. The economy is okay but not great. A recession is unlikely, but growth is still slowing.
Anything can happen, of course. But it’s time to acknowledge the possibility that the market could go sideways for the rest of the year and even beyond.
Dividends are king during times like this. Dividends roll in no matter what the market is doing or what’s going on in the world. Dividend income has accounted for a substantial portion of total market returns over time, about 34% since 1940. But dividends account for a much higher percentage of returns during periods of flat markets. While overall stock prices are stuck in the mud, the cash register keeps ringing.
In this issue, I highlight one of the very best income stocks on the market. It has a strong recent track record and is poised to thrive in the quarters ahead.
The S&P 500 broke back above the 6,000 level for the first time since February last week as the indexes are now within striking distance of their all-time highs (though they do have some work to do). By week’s end, the S&P 500 had gained 1.5%, the Dow had rallied 1.2% and the Nasdaq had advanced by 2.2%
It was another positive week for the market, with some major indexes nosing to new highs, and while it’s far from 1999 out there, individual stocks are seeing very few breakdowns while the leadership ranks gradually expand. Of course, there remain some headwinds out there, but the intermediate-term evidence remains positive, and we’re now even seeing some longer-term evidence start to point up. Thus, we’ll nudge our Market Monitor up another notch to a level 8.
This week’s list has something for everyone, with some zingers, some steady Eddies and more than a few recent earnings winners. Our Top Pick looks like an emerging blue chip in the cloud software field, and shares emerged from a big consolidation after earnings last week.
This week’s list has something for everyone, with some zingers, some steady Eddies and more than a few recent earnings winners. Our Top Pick looks like an emerging blue chip in the cloud software field, and shares emerged from a big consolidation after earnings last week.
The market continues to nurse itself back to health, with the S&P 500 back above 6,000 for the first time since February and volatility at a four-month low. Numerous newsy items could derail it, including this week’s inflation reports. But lately, the market has mostly ignored the headlines, and so should you.
So today, we try and capitalize on the strong market in front of us by adding a potential new growth leader with enough momentum that Mike Cintolo tabbed it as his “Top Pick” in last week’s Cabot Top Ten Trader issue.
Details inside.
So today, we try and capitalize on the strong market in front of us by adding a potential new growth leader with enough momentum that Mike Cintolo tabbed it as his “Top Pick” in last week’s Cabot Top Ten Trader issue.
Details inside.
The S&P 500 broke back above the 6,000 level for the first time since February last week as the indexes are now within striking distance of their all-time highs (though they do have some work to do). By week’s end the S&P 500 had gained 1.5%, the Dow had rallied 1.2% and the Nasdaq had advanced by 2.2%
Updates
A week ago, the market was teetering on the brink. But it teetered in the right direction.
The benchmark ten-year Treasury rate had soared above 4.8%, dangerously close to the late 2023 peak of about 5%. December CPI inflation was reported last week. A bad number could have thrust the 10-year rate above the peak, almost certainly prompting a selloff in stocks. But Wall Street was happy with the number and things went the other way.
The benchmark ten-year Treasury rate had soared above 4.8%, dangerously close to the late 2023 peak of about 5%. December CPI inflation was reported last week. A bad number could have thrust the 10-year rate above the peak, almost certainly prompting a selloff in stocks. But Wall Street was happy with the number and things went the other way.
In today’s note, we discuss pertinent developments and ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Atlassian (TEAM), GE Aerospace (GE), SLB Ltd. (SLB), Starbucks (SBUX), Super Hi International Holding (HDL) and Teladoc Health (TDOC).
The market’s trends were looking pretty iffy until better-than-feared inflation data came out on Tuesday (PPI) and Wednesday (CPI).
Those data releases finally gave Treasuries a boost and knocked the 10-year yield down from last week’s level of 4.8%, which was the highest since November of 2023 (the 10-year yield hit 4.74% last April, which was close, but not quite as high as last week).
Those data releases finally gave Treasuries a boost and knocked the 10-year yield down from last week’s level of 4.8%, which was the highest since November of 2023 (the 10-year yield hit 4.74% last April, which was close, but not quite as high as last week).
WHAT TO DO NOW: Remain cautious but stay alert. The five-week drubbing for the broad market and many growth titles has caused sentiment to really drop (a good thing), and this week’s bounce (as interest rates dipped) is intriguing … but at this point, we’ve seen one decent day of action after five tough weeks, so we’ll stand pat with our large (60%-ish) cash position and watch closely to see how this rally develops.
Fourth-quarter earnings season is underway, and while expectations are high at an estimated 11.9% average year-over-year growth among S&P 500 companies, according to data collected by Factset, the actual numbers probably won’t matter much to the market’s short- and intermediate-term direction.
Ignore inflation numbers too. CPI and PPI – this week’s dual reports of the December results – were encouragingly cooler than expected. But in the end, what really matters is how they impact the Fed’s decision-making, which we probably won’t know until at least the end of the month.
Ignore inflation numbers too. CPI and PPI – this week’s dual reports of the December results – were encouragingly cooler than expected. But in the end, what really matters is how they impact the Fed’s decision-making, which we probably won’t know until at least the end of the month.
Things are getting dicey in the market.
The problem is interest rates. Growth expectations are strong following the election. At the same time, inflation has been sticky and not moving lower. Investors were already expecting higher rates for longer when they got a gut punch with last week’s strong jobs report.
The problem is interest rates. Growth expectations are strong following the election. At the same time, inflation has been sticky and not moving lower. Investors were already expecting higher rates for longer when they got a gut punch with last week’s strong jobs report.
Uh oh. The rally is in trouble.
The market sort of wobbled into January after a rough December. It started good but things turned a little ugly last week after a better-than-expected jobs report and worries about sticky inflation.
The market sort of wobbled into January after a rough December. It started good but things turned a little ugly last week after a better-than-expected jobs report and worries about sticky inflation.
In today’s note, we discuss pertinent developments and institutional ratings changes for some of the stocks in the portfolio, including Agnico Eagle Mines (AEM), Alcoa (AA), American Airlines (AAL), Atlassian (TEAM) and Toast Inc. (TOST).
Markets were closed yesterday in honor of the late President Jimmy Carter.
No matter your politics, the service was well done and inspirational.
It was a solid opening this first week of 2025: new recommendation American Superconductor (AMSC) shares were up 10%, Centrus Energy (LEU) shares were up about 8%, Cloudflare (NET) shares were up 7.5%, and Dutch Bros (BROS) shares were up 7.3%.
No matter your politics, the service was well done and inspirational.
It was a solid opening this first week of 2025: new recommendation American Superconductor (AMSC) shares were up 10%, Centrus Energy (LEU) shares were up about 8%, Cloudflare (NET) shares were up 7.5%, and Dutch Bros (BROS) shares were up 7.3%.
Here are my top eight predictions for the cannabis sector for 2025.
1. Cannabis rescheduling goes through
Promises made, promises kept. Trump loves a “deep state” challenge. Put these two together, and it seems probable that rescheduling could happen in 2025.
1. Cannabis rescheduling goes through
Promises made, promises kept. Trump loves a “deep state” challenge. Put these two together, and it seems probable that rescheduling could happen in 2025.
The market sobered up in December after a big post-election rally in November. The S&P fell 2.5% in the last month of the year. But January has started out with stocks up 2.2% already.
Technology is driving the market higher. The sector is taking off after Nvidia (NVDA) issued bullish statements about demand for its artificial intelligence chips. AI is a huge growth catalyst for the market’s largest sector and has proven it can drive the indexes higher all by itself. In fact, technology has been the primary catalyst for the S&P over most of this bull market. But things might be changing.
Technology is driving the market higher. The sector is taking off after Nvidia (NVDA) issued bullish statements about demand for its artificial intelligence chips. AI is a huge growth catalyst for the market’s largest sector and has proven it can drive the indexes higher all by itself. In fact, technology has been the primary catalyst for the S&P over most of this bull market. But things might be changing.
In today’s note, we discuss pertinent developments and institutional ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Duluth Holdings (DLTH), SLB Ltd. (SLB) and the SPDR S&P Retail ETF (XRT).
The fabled “Santa Claus Rally” failed to appear this season, prompting concern for the early part of 2025 among many investors. We discuss what it entails for our investment approach.
The fabled “Santa Claus Rally” failed to appear this season, prompting concern for the early part of 2025 among many investors. We discuss what it entails for our investment approach.
Alerts
WHAT TO DO NOW: While a couple handfuls of mega-cap stocks act well, we continue to see more stocks hit air pockets than get going on the upside, which, combined with our mixed market timing indicators, has us staying relatively close to shore. Today we’re going to sell one-third of our stake in Cava (CAVA)—like so many names, the stock has been unable to break through resistance, and now it (and its peer group) has come under heavy selling pressure. Our cash position will now be just over 40%.
WHAT TO DO NOW: The market’s evidence remains unchanged, with a choppy, narrow and challenging environment. Many stocks are hanging in there, but there continue to be air pockets here and there, and our goal is to get out of names that are truly breaking down while holding (and possibly adding) resilient growth titles. Tonight, we’re going to sell PulteGroup (PHM), which hasn’t been able to bounce and cracked support today on a big rise in rates. Our cash position will be around 37%, which we’ll hold onto tonight but could put some back to work in the days ahead.
Shares of Rivian (RIVN) are trading up double digits today (though well off their highs) on news of a staged equity investment and joint venture (JV) with Volkswagen (VWAPY). One of the biggest concerns with Rivian (and other early-stage EV manufacturers) is access to capital and gaining enough manufacturing scale to get to cash flow positive. This deal with Volkswagen addresses much of that concern.
Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.
The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.
The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.
The shine seems to have come off gold and gold miners recently so we’re going to step aside from Alamos Gold (AGI) at just a hair above our entry price.
Portfolios
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Fundamentals: All-Weather Portfolio
An updated portfolio for Cabot Options Institute – Income Trader
An updated portfolio for Cabot Options Institute – Quant Trader
An updated portfolio for Cabot Options Institute – Fundamentals: All-Weather Portfolio
An updated portfolio for Cabot Options Institute – Quant Trader
Strategy
A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.
A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.
Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.
Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.
Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.