It remains pretty much the same story out there as we’ve seen for at least three weeks, if not longer. First, when it comes to the top-down evidence, it’s solid, with the intermediate-term trend of most everything pointed up; second, looking at things from a bottoms-up perspective, the evidence is encouraging, as many fresher breakouts have emerged in the past month or so; and third is more of a heads up, as near-term sentiment is very elevated and earnings season for most leading titles is ramping up, so some tricky trading (volatility, especially among extended stocks) is possible. Thus, we’re staying flexible, but given the overall positive vibes, are leaving our Market Monitor at a level 8.

This week’s list actually has many big-cap titles but there’s plenty for everyone. Our Top Pick appears to have finally left behind a multi-year consolidation after its Q3 report. Ideally you can get in on modest weakness if the market dips.

Stocks stayed the course this past week, holding near all-time highs despite myriad existential threats out there (expanding Middle East war, a toss-up presidential election two weeks away, Q3 earnings season underway, etc.). Clearly, the bulls are in control right now. That can change at the drop of a hat – or an unexpected news event. But we have to go with the evidence in front of us, and right now it’s saying, “Buy.”

But it does make sense to add some better values to the portfolio. And this week we do just that, adding an undervalued small-cap utility stock that recently caught the eye of Clif Droke, Chief Analyst of the Cabot Turnaround Letter.

Details inside.

Another week, another all-time high for the S&P 500 and Dow, while the Nasdaq is slowly creeping towards its previous highs. By week’s end the S&P 500 had gained 0.6%, the Dow had rallied 1%, and the Nasdaq had risen marginally.

Another week, another all-time high for the S&P 500 and Dow, while the Nasdaq is slowly creeping towards its previous highs. By week’s end the S&P 500 had gained 0.6%, the Dow had rallied 1%, and the Nasdaq had risen marginally.

It was yet another strong week for the market and countless stocks, many of which are breaking out to new highs. At some point the market may cool off, but for now at least, I’m not seeing any truly worrying signs. And in fact, the S&P 500 closed at a new record high as the index gained 1.44% on the week, while the Dow added 1.56%, and the Nasdaq rallied 1.63%.

It was yet another strong week for the market and countless stocks, many of which are breaking out to new highs. At some point the market may cool off, but for now at least, I’m not seeing any truly worrying signs. And in fact, the S&P 500 closed at a new record high as the index gained 1.44% on the week, while the Dow added 1.56%, and the Nasdaq rallied 1.63%.

After some choppy action the prior two or three weeks with defensive stocks leading, growth stocks and many major indexes have improved their standing - including the strongest names continuing to zoom higher. Now, near-term, there are some uncertainties, with earnings season and the election coming up, and there are still areas (including the Nasdaq itself) that are still battling with old resistance. Thus, we wouldn’t be shocked if extended names shook out a bit. But overall, we’re still leaning bullish, though are picking our spots; tonight we’re starting one more half-sized stake in a familiar name we think can do very well should the bulls remain in charge.

In the October Issue of Cabot Early Opportunities, we go deeper down the software rabbit hole, jump into a new grocery chain stock I suspect you’ve never heard of, dabble with a hot AI semiconductor stock and consider the potential of an EV stock that’s exploded on news of a big DOE loan.

As always, there should be something for everyone!

It was yet another strong week for the market and countless stocks, many of which are breaking out to new highs. At some point the market may cool off, but for now at least, I’m not seeing any truly worrying signs. And in fact, the S&P 500 closed at a new record high as the index gained 1.44% on the week, while the Dow added 1.56%, and the Nasdaq rallied 1.63%.

It hasn’t been any dramatic one- or two-day event, but the evidence has moved steadily toward the bullish case during the past couple of weeks. We will say that there are more than a few secondary factors that aren’t ideal, including the fact that interest rates are going up nearly every day, so we don’t think now’s the time to cannonball into the pool, per se, but we’re mostly holding our winners (booking the occasional partial profit on the way up) and gradually extending our line as new opportunities emerge. We’re lifting our Market Monitor to a level 8.

This week’s list is definitely growth-ier than the past couple of weeks, which is no surprise given the strength seen in that area. Our Top Pick has re-emerged after a brutal summer correction and has big leverage to a strong equity and crypto market. It’s not for the faint of heart, so use a loose stop if you go in.

Stocks are at all-time highs, yet again, defying the myriad potential macro tailwinds (expanding war in the Middle East, looming presidential election, another damaging hurricane, Q3 earnings season underway, etc.) that have been threatening to derail the market. One of them still could, but for now, we’ll stick with what’s in front of us, and that’s a market with plenty of momentum. Today, we lean into that momentum by adding a mid-cap tech stock recently recommended by Tyler Laundon to his Cabot Early Opportunities audience.

Details inside.

The markets have continued to flirt with new highs—pulling back and then moving forward—for the past month.

The Fed’s 50-basis-point rate cut inspired investors, home buyers, and those folks wanting to refinance their homes. The Mortgage Bankers Association reported that refinancing applications rose 20% right after the rate cut!

In today’s note, we discuss the recent earnings reports from Walgreens Boots Alliance (WBA). Our note also includes the monthly Catalyst Report and a summary of the January edition of the Cabot Turnaround Letter, which was published a week ago Wednesday.

WHAT TO DO NOW: Continue to lean bullish, but let’s see how this growth stock selling wave progresses. The top-down evidence remains in fine shape when it comes to the overall market, and most growth stocks have fallen off this week, but done so normally (while a few others may be trying to emerge). Thus, we’re giving names some rope, but we’re not tolerating any intermediate-term breaks. In yesterday’s special bulletin, we sold half of DraftKings (DKNG) and placed Duolingo (DUOL) on Hold, leaving us with 27% in cash. We’ll stand pat tonight, though are watching things closely and will be in touch if we have any more changes in the days ahead.

The new year is starting with big momentum. The S&P 500 had a torrid late-year rally where it soared about 16% between late October and the end of the year. Stocks closed out the year with nine straight up weeks, the longest streak since 2004.

The final numbers are in. And they’re impressive.

After a bear market in 2022, the market indexes came back sharply in 2023. That’s not unusual. Prior to last year, there had been nine years of negative S&P 500 returns since 1980. Seven of those down years were followed by up years, and four of those seven up years posted returns of 20% or higher. The market doesn’t usually stay beaten down for long.

There were no earnings reports or ratings changes this week. Due to the holidays, we will not be publishing a Friday note or podcast next week. The Cabot Turnaround Letter will be published next Wednesday, and our Friday note and podcast will resume on January 5, 2024.

WHAT TO DO NOW: Remain bullish, but don’t be surprised to see some uneasy trading. Yesterday’s market selloff was overdue, but it did nothing to change any intermediate-term evidence with the market or leading stocks. Near term, it’s probably more of a coin flip as to what happens, so we are picking our spots. In the Model Portfolio, we could have some more new buys soon but tonight we’ll hold off. We will, however, switch DraftKings (DKNG) to a Hold rating. Our cash position will remain around 26%.

First off, just a little housekeeping. I’ll be taking time next week to spend with my family, parents, siblings and new niece in Vermont. Much of our production staff will also be taking some time off, so there won’t be a Weekly Update next Thursday. If there is any pressing news I’ll address it via Special Bulletin.

I hope you have a Happy Holiday season!

Let the good times roll!

A good market just got better. A petering rally has been reinvigorated. And the good times may continue to roll through January.

This might be the first time anyone has described singer-songwriter Katy Perry as a sage observer of the stock market. Her song, “Hot and Cold” opens with the lyrics, “You change your mind / like a girl changes clothes.”

This perfectly captures the changes in sentiment in the stock market over the past two months. Going into October, the market was fully locked into the view that elevated inflation would endure, that 10-year Treasury yields were headed above 5% and that there was no hope for small-cap stocks or any group of stocks other than the Magnificent Seven mega-cap tech stocks. Dark days and a hard landing were undoubtedly ahead.

There were no earnings reports or ratings changes this week.

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

August expiration is near, and we need to roll a few positions in our various Fundamentals portfolios. Expect to see several alerts over the coming week as we roll into September and October expiration cycles.

SI-Bone (SIBN) reported yesterday afternoon that revenue rose by 30% to $33.3 million (beating by almost $2 million) and EPS came in at -$0.30, a penny better than expected. Management raised full-year guidance by $3.5 million to $133 million (at the midpoint), about $1 million more than the Q2 beat.

WHAT TO DO NOW: Remain cautious here as the correction plays out. Growth stocks continue to take the worst of it, with many names hitting intermediate-term peaks, though the selling is spreading to the rest of the market, too. Eventually, this should provide some excellent opportunities, but in the meantime we’re moving into more cash—today we’re going to dump our small-ish remaining positions of Monday.com (MNDY) and MasTec (MTZ), which will leave us with a bit over 50% in cash, which represents lots of buying power once the correction ends.

We can finally take our August 18, 2023, SPY 462/466 bear call spread off for a profit. If you choose to hold on to the trade to seek greater profits, please be aware of the risks.

Earnings Roundup: LUNG, RACE, ELF, SHOP, HUBS, FIX

IBM continues to rally, and the underlying price has now pushed past our short call strike. As a result, the delta of our short call is now at parity with our LEAPS contract, so we need to buy back our short calls and immediately sell more calls at a higher strike price that are further out in duration.

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

Our August 18, 2023, SPY 462/466 bear call spread is now in profitable territory, so for those who wish to take off the trade for a small profit, especially given the overall price action of the trade, well, no one is going to scoff at taking some profits off the table.

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.