Talk about a terrible week for cannabis investors. The Drug Enforcement Agency (DEA), on Monday, torpedoed the sector by announcing a move that will significantly delay favorable legal reform.

What happened: The DEA now wants to hold a formal hearing on the Biden administration’s proposal to reschedule cannabis, before deciding what to do. The move dashed all hopes of rescheduling before the election – which many analysts had expected – since the hearing is set for December 2.

After the tumultuous sell-off in the broad equity market last month, the S&P 500 Index is back to within a few points of its all-time high as of this writing in what has been one of the fastest comebacks in recent memory.

New technology is driving huge demand growth in old technology. The growth of artificial intelligence, electric vehicles, and semiconductor manufacturing will generate huge growth in electricity.

After being stagnant for most of the last two decades, electricity demand is soaring. Most of the increasing electricity demand (from data centers, EVs, and chip manufacturing) is coming from climate-conscious technology companies that will likely try to secure carbon-friendly power sources whenever possible.

Companies that can provide low-carbon electricity generation should be the primary beneficiaries of this increasing electricity demand. Opportunity is being created for certain companies that also tend to be very recession-resistant at a time when the economy is slowing.

But there is one utility that stands above all others in terms of the current opportunity. And it is highlighted in this month’s issue.

Note: Due to the Labor Day market holiday next Monday, you will receive your next Cabot Profit Booster issue on Wednesday, September 4.

Before we dive into this week’s covered call idea, we need to address our four August positions that expired a week ago.

The market’s rebound has been very impressive, though there are a couple of flies in the ointment (we’re not huge fans of defensive sectors rallying strongly) and this week looks like a good test for a couple of reasons: First, there are some key quarterly reports coming out in key technology areas, and trend-wise, many growth-oriented measures are closing in on five-week highs, which could turn the intermediate-term trend up … if all goes well. For now, nothing has officially changed: If we see more breakouts and further upside, it would obviously be bullish, but while some retrenchment from here wouldn’t necessarily be bearish, it would be a sign the market likely needs more time to set up. We’ll leave our Market Monitor at level 6 this week.

This week’s list is a bit more diversified than the past two weeks, and for our Top Pick, we’re going with a name that’s very strong following quarterly results, has triple-digit growth and a great story—if you enter, be sure to keep it small and use a loose stop.

After an unusually eventful start to the month, stocks have settled into their normal pre-Labor Day malaise. It won’t last long. Early September typically brings a round of selling as Wall Street returns from vacation and starts culling laggards from their portfolios. But with a Fed rate cut now definitely coming just a couple weeks later, could this be a more constructive September than normal? We’ll see. In the meantime, let’s try and sidestep the coming volatility by adding an undervalued mega-cap tech stock that’s well outside U.S. borders. It’s a former market darling that’s become unloved in recent years. But new Cabot Turnaround Letter Chief Analyst Clif Droke spots a bargain, and so today we add it on the cheap to our Cabot Stock of the Week portfolio as well.

Details inside.

The many stock market worries of just three weeks ago appear to be a thing of the past as the S&P 500, Dow and Nasdaq all gained just over 1% last week, and all are now within striking distance of all-time highs.

The many stock market worries of just three weeks ago appear to be a thing of the past as the S&P 500, Dow and Nasdaq all gained just over 1% last week, and all are now within striking distance of all-time highs.

The market’s rebound from the August 5 mini-panic has been unusual—in a good way, with a straight-up advance that’s recouped most of its prior decline, given up very little of its gains along the way, and has been led by a gaggle of growth stocks that have powered ahead on earnings. Now, we’re not totally free and clear here, and some short-term wobbles could easily come; by our measures, the intermediate-term trend is sideways and defensive stocks are percolating, so there’s more work to do. All in all, we’re putting a little more money to work tonight but will still be holding just shy of 40% in cash as we see if the market can further confirm a new uptrend.

In the August Issue of Cabot Early Opportunities, we spread things out across both growth and growth & value ideas. We have a number of newly public players in markets ranging from water quality to electronics certification, as well as a couple of AdTech players. Last but not least is a familiar face in the data security market.

As always, there should be something for everybody.

The market isn’t totally out of the woods at this point—the intermediate-term trend of most indexes and growth measures is essentially neutral here, there’s plenty of overhead to chew through. That said, there’s no doubt the rebound has been impressive, with some indexes recouping 60% to 80% of their corrections, and individual stocks are acting much peppier of late. What happens from here will be key: Some backing off would be normal, but if any retreat is tame and individual stocks continue to flex their muscles, it would be a good sign—though obviously a huge drop would be iffy. For now, we continue to slowly rebuild exposure but are remaining flexible. We’ll nudge our Market Monitor up to a level 6 but are taking things on a day-to-day basis.

This week’s list is another that’s loaded up with powerful charts, all of which have recently surged on earnings reports. Our Top Pick has been extremely tedious for the past 16 months but is flashing some overwhelming buying power as the sector improves.

Stocks are rolling again, and the panic that engulfed the market just two weeks ago has vanished, replaced by the longest market winning streak all year. Nearly all our Stock of the Week stocks are up in the past week, several of them by double digits, led by AST SpaceMobile (ASTS) – up more than 80% (!) since we last wrote. So, let’s strike while the iron is hot and add another upstart growth stock to the portfolio in the form of a mid-cap just recommended by Carl Delfeld in his Cabot Explorer advisory.

Details inside.

The strong November rally slowed down last week but it’s still very much alive. The S&P 500 closed last week up 8.7% for the month and the good times might continue.

The current belief in peak interest rates and a “soft landing” has investors still in an optimistic mood. The VIX, known as the market’s fear gauge, hit the lowest level since January 2020 last week. Any piece of good news could ignite a further rally with the current kindling.

The best poker players usually are stone-faced. That means that they show no emotions, make no unusual or unplanned moves, and most important, have no “tells.” A “tell” is any change in a player’s behavior, attitude or other actions that indicate the strength of the cards they hold in their hand. Common tells are changes in their chatter, eye contact, twitches and frequency of checking their hole cards.

WHAT TO DO NOW: Continue to put money to work, albeit in a step-by-step fashion. From a top-down perspective, our market timing indicators continue to improve, with all three of our key measures (Trend Lines, Tides, Two-Second) now positive. Individual growth stocks are acting well, though many are still repairing the damage of the past few months. Thus, we’re optimistic, but want to see continued improvement to pull us into a heavily invested position. In the Model Portfolio today, we’re going to buy a half-sized position in Arista Networks (ANET) and add another 3% stake to Duolingo (DUOL), leaving us with around 44% in cash.

Wall Street has decided that interest rates have peaked. And the market loves it. The S&P 500 is up 8.4% so far this month and has made up most of the decline of the prior three months.

A quick reminder that Cabot will be closed tomorrow and Friday for Thanksgiving. I hope you have a great holiday and enjoy a break from the market.

Most stocks produce lackluster returns. A recent study¹ by Hendrick Bessembinder, a professor at Arizona State University’s WP Carey School of Business, looked at U.S. stock market returns from 1926 to 2022. Nearly 60% of all stocks detracted from shareholder value during this time period. From 1926 to 2016, half of the total wealth created in the stock market was produced by only 90 stocks. By 2022, the number was only 72 stocks.

This week’s note includes our comments on earnings from Advance Auto Parts (AAP), Macy’s (M), Tyson Foods (TSN) and Vodafone (VOD). The earnings season is winding down, with Kohl’s (KSS) reporting next Tuesday (Nov. 21) and Duluth Holdings (DLTH) reporting on November 30.

Cabot Options Institute Quant Trader is focused exclusively on creating consistent returns using high-probability options strategies including bear call spreads, bull put spreads, iron condors and more. Whether you have questions about the strategies, or even about setting up your account, or how to make your own trades, Andy will answer all of your questions

There have been a lot of interesting developments in the market over the past week, with the lower-than-expected inflation reading and resulting speculation over the Fed’s next move right near the top of the list.

As it stands now, the market is saying no more Fed rate hikes, and even that we’ll see two cuts by next July.

Frankly, that seems a bit aggressive.

Cabot Options Institute Income Trader is focused exclusively on the creating consistent income through a variety of options selling strategies. Whether you have questions about selling puts, covered strangles, jade lizards or our income wheel approach, Andy is more than happy to help you steepen your learning curve in this live event.

The November rally is alive and well. After the market soared to the highest weekly returns of the year in the first week of the month, the rally sputtered last week. But it has come alive again after a good inflation report.

WHAT TO DO NOW: Earnings season remains a landmine of sorts, though we have seen some names find support later in the week. This bulletin is in regards to MasTec (MTZ), which, frankly, reported a totally unexpected sour quarter and poor outlook, which is leading to a big break today. We’ll sell half of our shares and hold the cash for now, leaving us with around 41% on the sideline.

I will be exiting the ConocoPhillips (COP) trade today. I will discuss the trade in greater detail in our subscriber-exclusive webinar at noon ET Friday, August 4.

ConocoPhillips (COP) is due to announce earnings Thursday before the opening bell.

Sell Terex (TEX)

We jumped into TEX four months ago on March 3, literally just a few days before the stock took a dive that ended up sending it 30% lower over the next few weeks. We held on and those of you that added shares along the way should have a much better return than the roughly 7% gain showing in our official portfolio. With so many growthier stocks acting well and TEX up over 50% from its April lows, I’m going to take the modest gain and boot it from our portfolio today. To be clear, I don’t hate TEX and think the bullish thesis I presented back in March still holds true. That said, the reality is there are just too many other stocks with better upside potential right now and I want to maintain concentration in those while taking down our market exposure ever so slightly through next week’s Fed meeting (our next Issue is due out in two weeks). SELL

WHAT TO DO NOW: After selling half of DoubleVerify (DV) yesterday, we’re going to prune our position in Celsius (CELH), which has been stalling out for about a month and a half and is now cracking some near-term support. The big-picture chart isn’t bad, so we’ll hold a good-sized stake, but we’ll trim here and hold the cash. That will leave us with around 36% in cash.

WHAT TO DO NOW: The market is quiet today, and while the possibility of a near-term pullback in growth stocks is growing, the big-picture evidence remains in good shape. Today, though, we are pulling the plug on Inspire Medical (INSP), which hasn’t been able to get going and today is cracking support on big volume. We’ll sell our half position and hold the cash.

We are adding another stock to our active, Buffett’s Patient Investor portfolio today. Again, my intent is to ramp up the portfolio to a minimum of five positions over the coming expiration cycles, with the ultimate goal of having eight to 10 positions. But we will continue to stay methodical in our approach and add positions when it makes sense.

I will be exiting the Visa (V) trade today. I will discuss the trade in greater detail in our subscriber-exclusive webinar at noon ET Friday, July 28.

While the S&P 500, Nasdaq 100 and Russell 200 are down on the day, the Dow is up on the day. As a result, our Dogs and Small Dogs portfolios are benefitting greatly, as seven out of the ten positions are up on the day.


We still have a few July positions to roll forward and several underlying stocks that have recently pushed above their short call strikes. So, the plan is to buy back our short calls, where needed, and immediately sell more premium. I’m going to start today with AMGN which is one of the few positions with July 21, 2023, calls.

WFC has provided us a nice source of income since we introduced the big bank to the portfolio. We’ve managed to bring in 20.5% of options premium/income in just under one year using the Income Wheel strategy while the stock itself has only made half of that return at just over 10%.

While the S&P 500, Nasdaq 100 and Russell 200 are down on the day, the Dow is up on the day. As a result, our Dogs and Small Dogs portfolios are benefitting greatly, as seven out of the ten positions are up on the day.


We still have a few July positions to roll forward and several underlying stocks that have recently pushed above their short call strikes. So, the plan is to buy back our short calls, where needed, and immediately sell more premium. I’m going to start today with AMGN which is one of the few positions with July 21, 2023, calls.

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.