After an ugly start to the week on Monday, stocks rallied very impressively as the S&P 500 gained 4.6%, the Dow added 2.5% and the Nasdaq surged higher by 6.7%.

Markets recovered some gains yesterday following a climb down on both stiff reciprocal China tariffs and speculation that Fed Chairman Jerome Powell might be fired. Explorer stocks had a good week with Luckin Coffee (LKNCY) up 9%, while DBS Bank (DBSDY) shares were up 7.7% this week following last week’s 6.9% gain.

Today, we add a new ETF with exposure to a very particular European sector that should be immune to the ongoing tariff wars.

Before we dive into this week’s covered call idea we need to address our stock positions coming out of April expiration, all of which we are going to sell as the market continues to be under pressure.

It’s been a tough market. The S&P started this week down about 6% for the month of April, over 10% YTD, and over 14% from the high. And that was before Monday’s selloff. It is entirely possible that the market falls back to a new low and an official bear market.

The tariff uncertainty is continuing, and it could get worse. A bad headline could roil the market any day. We’re not out of the woods yet. The market could get worse before it gets better. But it will get better at some point.

Investing for dividends and income is a longer-term proposition. Investors typically don’t jump in and out of these stocks in a short time. You have to hold the stock long enough for the dividend to make a difference. Although the market remains troubling in the near term, there are some great opportunities for longer-term investors.

The market continues to exhibit softness on persistent worries over (what else?) the tariff situation, and it’s clear that a re-test of the recent lows is underway. While there are some encouraging signs on the technical front, the primary evidence is still negative, with the major indexes remaining under their key trend lines. Bottom line: Patience will likely be needed before a sustained advance can develop. Accordingly, we’ll keep our Market Monitor at level 3.

This week’s list has a fair number of stocks that should be able to shake off tariff-induced headwinds. Our Top Pick is showing solid relative strength and has excellent potential in a fast-growing business.

Another down week – and down day – for stocks as tariff and inflation anxieties continue to run rampant. We may be headed toward a re-test of the post-Liberation Day lows from the beginning of the month. Fortunately, most of our stocks are holding up well, with no big losses in the last week despite a 4.3% decline in the S&P 500. In fact, a number of our stocks are thriving. Today, we add another stock that’s going against the grain of the market. It’s a new recommendation from Tyler Laundon to his Cabot Early Opportunities audience. It’s the kind of all-weather holding that can keep its head above water in this volatile market – and perhaps thrive if/when the tariff dam finally breaks.

Despite an onslaught of tariff headlines and rumors, the holiday-shortened week was mostly quiet outside of a nasty sell-off on Wednesday. By week’s end the S&P 500 had lost 1.5%, the Dow had fallen 2.7% and the Nasdaq had declined by 2.6%.

Despite an onslaught of tariff headlines and rumors, the holiday-shortened week was mostly quiet outside of a nasty sell-off on Wednesday. By week’s end the S&P 500 had lost 1.5%, the Dow had fallen 2.7% and the Nasdaq had declined by 2.6%.

The market has bounced off of last week’s low, and given the number of secondary extremes seen during that selling panic, we think the odds are good that low will hold for a while--if not longer. That said, bottoms are usually a process, not an event. so there’s a good chance the market is now building a bottom area, which will likely prove hectic on a day-to-day basis (as we’ve seen this week) but allow the leaders of the next advance to start separating from the pack.

That’s a first step, and we’re busy building our watch list--but when you look at the primary evidence, all of it remains negative, as the trends of most everything are still down. Thus, while we won’t rule out a small new position or two if the market continues to stabilize, we’re remaining very close to shore and keeping our eyes on the big prize -- hopping on some new leaders early in the next sustained uptrend.

Despite the crazy market, there are still stocks out there that are acting extremely well.

This month’s Issue covers five standout performers in the sports betting, gold mining, natural foods, insurance and pharma markets.

The previous weekend’s worry about a crash last Monday proved to be incorrect as the market had some early-week struggles, but those were, at least in the short term, washed away on Wednesday as the indexes exploded higher. By week’s end, the S&P 500 had rallied 5.7%, the Dow had gained 5%, and the Nasdaq had rebounded by 7.3%.

We think the odds favor the market has found a short-term low (last Monday) amid lots of panic selling, and it’s probably starting to repair the damage from the prior few weeks … but that process is likely to take some time, as the market deals with the tariff and economic uncertainty and as new potential leaders try to round out launching pads. Of course, how the market acts from here will be key, so we’re remaining flexible, but we always advise going with what’s in front of us, and right now the odds favor more patience will likely be needed before a sustained advance can develop. We’ll leave our Market Monitor at a level 3.

As the correction has gone on, it’s become easier to spot the names that are resisting the decline. Our Top Pick is a newer name to most and it’s shown accelerating accumulation the past three weeks.

WHAT TO DO NOW: The market remains in good shape, though we have seen the indexes and many individual titles exhale a bit of late as many short-term uncertainties (earnings season and the election) and headwinds (rising interest rates) weigh. We’re bullish overall, but are being selective on the buy side—tonight, we’re standing pat, holding our 20%-ish cash position and collection of relatively strong performers.

The S&P 600 SmallCap Index has dipped about 3% over the last week while yields have gone up.

The chart of the 10-year yield and the small-cap index plotted together makes this inverse relationship (in the very short term) clear as day.

October hasn’t been accompanied by the type of stock selling we’ve witnessed the last two years, when U.S. markets fell sharply in October and reached a second-half-of-the-year bottom both times. Instead, this October has wrought a more subtle disappointment: rising interest rates.

Indeed, despite the Fed’s 50-basis point cut to the federal funds rate in mid-September ringing in a new era of rate slashing, 10-year Treasury yields have risen steadily since the calendar flipped to October, going from 3.80% to 4.24% – their highest level since July. In fact, Treasury yields are up 15% since September 18, the day the Fed cut rates for the first time in four and a half years.

The market has been generally very good, although it’s wobbling this week so far.

The bull market that started two years ago has returned more than 60% in the S&P 500. The index is up about 23% year to date. The market rally has also broadened since the summer to include many other stocks and sectors besides technology.

In today’s note, we discuss the reasons why it’s a good time to exit our (mostly) profitable holdings in Alibaba Group Holding (BABA), Nokia (NOK), Tyson Foods (TSN) and Zillow (Z).

We’re adding two new stocks to the portfolio, providing us with exposure to the booming software and utilities sectors.

We’ll also discuss some catalysts for three stocks across three different sectors in what look to be powerful intermediate-term turnarounds.

While the S&P 500 Index made record highs (again) this week, the real story has been in small caps.

From last Wednesday’s close through mid-day today, the S&P 600 small-cap index is up 2.9%, more than twice the return of the large-cap index, which is up 1.3%.

The gains have been propelled by consumer discretionary, staples, financials, industrials and tech stocks.

Bank stocks such as Morgan Stanley (MS) and Goldman Sachs (GS) had strong earnings while tech is starting to show signs of weakness. ASML (ASML) reported sharply lower quarterly sales and giant Samsung Electronics’ share price (listed on the Korea Exchange) has fallen almost 30% over the past six months as it struggles to catch up with SK Hynix and Micron in supplying the most advanced AI chips.

Still, everyone is waiting for Nvidia’s (NVDA) earnings as capital spending in AI remains robust.

We spend the vast majority of our time focused on U.S. stocks, and rightly so.

After all, although America has just 4% of the world’s population and generates 23% of the global GDP, 72% of worldwide investment capital is spent on U.S. stocks. That’s a stat our global investing expert, Carl Delfeld, relayed to me and my colleague Brad Simmerman on our latest Street Check podcast (click here to listen to the entire conversation). I knew the global investment axis tilted toward the U.S. – just maybe not that much.

The two-year-old bull market is about to meet third-quarter earnings. And things look good.

The bull market is alive and well and shows no signs of stopping. Since the bear market low in October of 2022, the S&P 500 has risen over 60%. It has been powered by the artificial intelligence catalyst, a surprisingly resilient economy, and the peaking of interest rates. The current “soft landing” expectation means we are getting rate cuts but no economic pain. That’s good news.

The bull market is now two years old and shows no signs of stopping.

Since the bear market low in October of 2022, the S&P 500 has risen more than 60%. It has been powered by the artificial intelligence catalyst, a surprisingly resilient economy, and the peaking of interest rates. Overall earnings are projected to be strong, and the market could get a further boost from AI-specific earnings this quarter.

In today’s note, we discuss the acceleration—and potential for overcrowding—of the China stock momentum trend, specifically how it relates to our position in Alibaba Group Holding (BABA).

The small-cap indices (Russell 2000 and S&P 600) have been totally uninspiring over the last three weeks, which is sort of odd given that the Fed cut interest rates by 50 basis points almost exactly three weeks ago.

Theoretically, lower rates should benefit small caps given higher exposure to variable rate debt, which requires lower interest payments as rates decline.

Cannabis stocks rallied hard Monday, particularly after the close when we learned that the Florida Supreme Court approved a referendum on legalizing the sale of cannabis for recreational use. Florida already permits medical use, but the change would expand the size of the Florida cannabis market significantly, especially considering Florida’s large tourist industry.

Sell Varonis (VRNS)

Just a quick heads up, I’ll be adding several new positions early next week. We currently have four positions in the portfolio and my immediate goal is to get back up to between six and eight positions using our ladder-based approach for consistent, weekly income.

Dogs of the Dow Portfolio (DOW), Buffett’s Patient Investor Portfolio Alert (GOOGL)

After a surprising gap higher, MMM has continued to follow through with its recent trend higher, with nary a pullback. As a result, we need to buy back our calls and once again extend our deltas back into positive territory.

I’m adding another new bear call spread to the mix and intend on adding several more trades over the coming days.

WHAT TO DO NOW: The market and especially leading stocks are still very choppy, with news-driven moves becoming the norm of late, and today we’re seeing another wave of selling in the names. Big picture, we’re still optimistic, but we’re taking things on a stock-by-stock basis at this point. Today we’re going to sell Shift4 (FOUR), which was hit hard yesterday after saying it received no worthwhile buyout bids and, without any bounce, we’re going to cut bait here, leaving us with 32% in cash. Details below.

I want to lock in a return and look to sell more put premium in XLU over the next few trading days. By locking in a return in XLU, our total returns for Income Trader will exceed 160% for the first time since inception.

Shares of Elastic (ESTC) continue to struggle in the weeks after reporting earnings. We sold part of our position on March 5 for a 30% gain, and we’ll sell the rest today for a roughly 22% gain. SELL REMAINING SHARES

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.

Shares of Cadre (CDRE) were down almost 10% yesterday on news of a secondary offering, which will be priced at 35, roughly the level of yesterday’s closing price. It’s not atypical for a stock like this to absorb a secondary over a week (roughly) then resume its upward march. Additionally, with part of CDRE’s growth strategy revolving around M&A, it’s not too surprising that they would seek to raise capital and do so with equity (strong stock) rather than debt (high cost). Maintaining Buy rating as this offering doesn’t change the big-picture story. BUY

Dogs of the Dow Portfolio Alert (VZ, AMGN), Buffett’s Patient Investor Portfolio Alert (GOOGL)

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.