The top-down evidence remains mostly positive out there, but growth stocks have been hit very hard--taking things on a stock-by-stock basis has us with more than 50% in cash and, given the breakdowns out there, we’re holding that cash tonight. That said, we’re remaining flexible, too, as the major indexes aren’t in bad shape, the broad market’s resurgence has held so far and we’re heading into the meat of earnings season; given it all, we still think some fresh breakouts could occur if things go well. Thus, for now, we’re cautious, but we’re keeping our eyes open for opportunities.

The S&P spent most of the first half of July setting new highs. But that changed last week. The technology sector sold off on news of new AI chip export restrictions to China. The S&P fell about 2% for the week, giving up most of the gains for July. It may be a blip. It probably is. But the market is high, and stocks showed vulnerability to bad headlines.

A flatter or down market going forward makes income more valuable. The cash register continues to ring regardless of short-term market gyrations. At the same time, many income stocks are still cheap, and interest rates are likely to trend lower from here.

Some of the very best income stocks are in the energy sector. After recent price shocks and other problems in the energy sector, investors are coming around to realizing energy is a strong business that isn’t going anywhere for a long time.

In this issue, I highlight one of the best natural gas companies on the market. It is a newly formed company in the business of exporting abundant and cheap American natural gas overseas. It’s big business. In a short time, this company has become one of the world’s biggest natural gas exporters.

Before we get into today’s covered call idea, coming out of July expiration we have a couple positions that we need to address. Let’s dive in …

Pinterest (PINS), Sweetgreen (SG), Howmet Aerospace (HWM) and Hims & Hers (HIMS) all closed below their strike prices on Friday, which means the calls we sold expired worthless, leaving us with our stock positions today. Let’s exit those stock positions ahead of earnings season.

The past few sessions have brought an avalanche of news and rumors involving inflation, rumors of China/Taiwan tensions, a worldwide tech shutdown and, this weekend, a shakeup in the 2024 election, all of which have caused some reverberations. At this point, the top-down measures look fine, but there’s no doubt that leading stocks (especially growth stocks) have gotten very sloppy, with a pickup in breakdowns and distribution. All in all, we’ll move our Market Monitor to a level 6 and stay flexible: A strong rebound and some positive earnings gaps could still launch many new leaders, but we need to see the buyers step up in individual names to get more aggressive.

Another piece of good news is that it’s still not hard to find strong stocks with good stories, as this week’s list has names from a variety of areas. Our Top Pick is a big-cap name that reacted well to earnings last week and looks poised to help lead a fresh upturn in its sector.

Dog days of summer? Ha!

Not in the midst of a presidential election with enough drama for an entire season of Game of Thrones, rising U.S.-China-Taiwan tensions, a software failure slowing global commerce to a halt (briefly), two major wars still ongoing, and the Olympics just four days away. It’s enough to cause investors to make rash decisions. So let’s make some sane ones instead by selling two obvious underperforming fallen tech stars and adding a low-drama dividend payer that has a long history of outperforming the market.

It’s all part of today’s busy mid-summer issue. Let’s get started.

Led by a steep decline in the formerly red-hot Semiconductor sector, the market had a somewhat “gross” five-day stretch. For the week, the S&P 500 fell 2.35%, the Dow rose marginally, and the Nasdaq lost 4.35%.

Led by a steep decline in the formerly red-hot Semiconductor sector, the market had a somewhat “gross” five-day stretch. For the week, the S&P 500 fell 2.35%, the Dow rose marginally, and the Nasdaq lost 4.35%.

Markets and especially the tech-heavy Nasdaq index led by semiconductor stocks sold off yesterday. Reasons include perceived rising protectionist and isolationist pressures in both Europe and America. Meanwhile, small-cap stocks continue to rally, and some overseas markets were also up.

As one would expect, our tech stocks pulled back somewhat while all three of our dominator stocks gained ground this week.

In the July Issue of Cabot Early Opportunities, we continue to lean into the strong market and focus our attention on the small end of the market cap curve.

We have small and mid-cap players in the software, semiconductor, green energy, industrial tech and AdTech spheres, each of which has compelling reasons propelling shares higher.

As always, there should be something for everybody.

While I rarely highlight the gains/losses of the Russell 2000 (IWM) as the group has been mostly a dog for the last year-plus, last week the small-cap index came alive on Thursday and Friday, far outpacing its index peers with a gain of 5.25% on the week.

And while the other indexes couldn’t keep up with the IWM, the S&P 500 gained 0.8%, the Dow rallied 1.5%, and the Nasdaq fell 0.35%.

While I rarely highlight the gains/losses of the Russell 2000 (IWM) as the group has been mostly a dog for the last year-plus, last week the small-cap index came alive on Thursday and Friday, far outpacing its index peers with a gain of 5.25% on the week.

And while the other indexes couldn’t keep up with the IWM the S&P 500 gained 0.8%, the Dow rallied 1.5%, and the Nasdaq fell 0.35%.

While I rarely highlight the gains/losses of the Russell 2000 (IWM) as the group has been mostly a dog for the last year-plus, last week the small-cap index came alive on Thursday and Friday, far outpacing its index peers with a gain of 5.25% on the week.

And while the other indexes couldn’t keep up with the IWM the S&P 500 gained 0.8%, the Dow rallied 1.5%, and the Nasdaq fell 0.35%.

After a very difficult September during which the S&P 600 SmallCap Index fell back to the May lows, things have finally stabilized in small-cap land over the last two weeks.

Energy stocks have been one of the main contributors lately, as have consumer staples and discretionary stocks. These guys have helped offset weakness in small-cap healthcare and tech.

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

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 market is distinctly more optimistic this month as “soft landing’ hopes revive.

After a rough couple of months, the S&P is trending higher in October. The economy is still solid. In fact, retail sales numbers for September blew away expectations, once again showing that a recession is nowhere in sight.

Not a lot is happening in the market right now, but soon a lot will happen.


Tech earnings are just around the corner, which should help reveal whether the Magnificent Seven mega-cap tech stocks are worth their current prices. Apple (AAPL) shareholders nervously wait for signs that revenue growth isn’t truly stalled even though the company’s new product offerings don’t quite have the appeal as earlier ones. Broadly, investors of all types wonder how consumer and industrial goods producers will fare, given rising pressures from inflation, inventory de-stocking, global outlook worries and student loan repayments. Bank investors await results from Bank of America (BAC) and other banks to glean whether we are headed into a second round of deposit runs. Stocks are not cheap, especially in a world of 5-6% Treasury yields … how much, if at all, will this matter?

The market is rallying this month as the “Goldilocks” scenario gets renewed traction.

The economy is still solid. There are no signs of recession. At the same time, the Fed is making noises like it may be done hiking rates because of the higher longer-term rates. A good earnings season may also buoy stocks.

This week’s note includes our comments on earnings from Walgreens Boots Alliance (WBA) and Wells Fargo & Co (WFC). Next Thursday, we get earnings from Nokia (NOK). The deluge starts the following week with eight companies scheduled to report.

WHAT TO DO NOW: Remain cautious. The bounce starting last Friday does come from a nice setup and, encouragingly, has seen more than a few growth stocks perk up, including some to new highs. However, the weight of the evidence remains pointed to the downside, with our Cabot Tides and Two-Second Indicator clearly negative, the vast majority of stocks also in intermediate-term downtrends and interest rates still trending up. We’re taking it one day at a time, but right now, we’re sticking with a big cash position of around 65%—we have no changes in the Model Portfolio tonight.

Things have been rough in the MedTech world lately.

The new class of weight loss drugs (GLP-1s) is shaking things up way more than expected. And rather than think things through it appears that larger investors have decided to take down their exposure to MedTech now and ask questions later.

Just take a look at the iShares Medical Device ETF (IHI). It has fallen from 58 in late July to under 46 today, a greater than 20% decline.

This was an encouraging week for Explorer stocks with almost all making gains and Novo Nordisk (NVO) shares up 10%. Chile’s lithium and food fertilizer play, Sociedad Química y Minera de Chile S.A. (SQM), also got off to a nice start in its first week as an Explorer recommendation.

And today, we get into America’s decline as a food superpower - and reveal which emerging market is filling the void.

The short-term measures we spoke about last week when we sent our SPY bear call spread out have subsided a bit. As a result, I want to lock in our SPY bear call spread that we placed just seven days ago for a nice profit.

PFE rallied over the past expiration cycle and as a result, our June 16, 2023, 40 calls were “called” away last week. We made 4.4% on the income trade. Per our Income Wheel guidelines, we will remain mechanical and sell puts in PFE today.

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.

With all of our short-term overbought measures in extreme territory I want to add a bear call spread to the mix for the August expiration cycle. While I look at overbought extremes as simply weight of evidence, it’s hard to pass up a trade when we are seeing overbought extremes coupled with several other market indicators that are screaming a short-term extreme is here.

This morning, I published my latest recommendation: Buy 2seventy bio (TSVT).

We currently own the JPM January 17, 2025, 100 call LEAPS contract at $46.20. You must own LEAPS in order to use this strategy.

I am buying back our short calls today and immediately selling more premium. Our June 16, 2023, 55 calls are essentially worthless, so let’s buy back our calls, lock in some profits and immediately sell more call premium.

With the June 16, 2023, expiration cycle coming to a close at week’s end, it’s time to start buying back our short calls and selling more premium going out 30 to 60 days. I’ll be sending out numerous trade alerts for the various portfolios over the next few days, including the potential for new trades in our active portfolios. My hope is to have all of our June 16 positions rolled by mid-day Wednesday.

We are moving shares of Molson Coors Beverage Company (TAP) from Buy to Sell. The shares are approaching our 69 price target, with only about 4% upside remaining.

WHAT TO DO NOW: The market’s action continues to take steps in the right direction, with more bullish character changes among big-picture measures and, more importantly, leading stocks. Tonight, we’re going to add some exposure—we’re going to add another 5% stake in ProShares Ultra S&P Fund (SSO), buy another half-sized stake in Uber (UBER), and start a fresh half position in DoubleVerify (DV). That will leave us with just over half in cash—still plenty of cushion if the rally falters, but also lots of dry powder to pounce on new leaders should they continue to firm up.

With 11 days left until the June 16, 2023, expiration cycle ends, we need to begin the process of rolling the remainder of our short calls and immediately selling more call premium, preferably in July. In addition, CSCO has rallied as of late, which has pushed our short calls in the money. As a result, I want to buy our short calls back and immediately sell more.

Our short calls are in-the-money and are due to expire today. As a result, we are going to buy back our short calls and immediately sell more premium.

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.