As we enter the last and one of the slowest trading weeks of the year, I wanted to wish everyone a happy, prosperous and exciting year ahead!

Since all of our current open positions are in great shape with several weeks left until the January 19 expiration cycle, I’m going to keep it short today. While I might add one new position this week, I don’t really plan on making any other trades.

Despite an ugly day for the market on Wednesday, the buyers again bought the dip, and as of the close Friday, the S&P 500 is now approximately 1% from all-time highs. For the week, the S&P 500 gained 0.57%, and the Dow and Nasdaq rallied approximately 0.2%.

I hope everyone had a joyous and memorable holiday season!

As we move into the last trading week of the year, it should be no surprise that there is little in the way of earnings announcements this week. As a result, let’s take a moment to appreciate the time spent with loved ones, the delicious meals shared, and the special traditions celebrated. Wishing you all a happy and prosperous New Year!

Despite an ugly day for the market on Wednesday, the buyers again bought the dip, and as of the close Friday, the S&P 500 is now approximately 1% from all-time highs. For the week, the S&P 500 gained 0.57%, and the Dow and Nasdaq rallied approximately 0.2%.

In our final Explorer issue of 2023, we add a new artificial intelligence play whose revenues are on track to expand by nearly 50% this year, and whose share price has more than tripled YTD - and yet trades well below its July highs. Back on the upswing, it’s worth buying now.

Enjoy, and happy holidays!

In the December Issue of Cabot Early Opportunities, we continue to lean into the market’s bullish trend. We dig into five modest growth companies with exposure to AI, social media/advertising, footwear, HR software and the exciting world of road paving.

As always, there’s something for everybody!

In terms of the market, with the Federal Reserve signaling that the interest rate hiking cycle is over and that there may even be rate cuts in 2024 the bulls cheered this news as the S&P 500 gained 2.5% last week, the Dow rallied 2.9%, and the Nasdaq added 2.85%.

The market has had seven consecutive higher weeks. And the positive momentum should continue into the new year.

The S&P 500 is up 12.5% in the last seven weeks and 23% for 2023. But those returns are deceiving. Until the market rally broadened out recently, only seven large technology company stocks accounted for nearly all the gains.

Many stocks are still in a bear market. In fact, certain more interest rate-sensitive stocks recently fell to the lowest level since the trough of the pandemic market more than three years ago, although they have rebounded with falling interest rates recently.

Buying stocks in the throes of a bear market has proven to be a winning strategy over time. Buying stocks after they have already started to climb out of the lows has proven to be a winning strategy sooner.

The timing may be perfect for a rare opportunity to generate much higher returns than can normally be expected from stocks of defensive companies. In this issue, I highlight a defensive stock that had been a stellar performer before inflation and rising interest rates took hold. It is priced near the lowest valuations in its history and has recently been generating upward momentum.

Note: We will have a Movers & Shakers update later this week, but just a heads up, there will be no Top Ten issue next week (December 26), as it’s the second of our two weeks off all year. For those that celebrate, we hope you have a very, very Merry Christmas!

On to the market, things can always change, but after two years of rate hikes and hawkishness, it looks like the Fed is finally “officially” off the market’s back. Interest rates have been the tail that’s wagged the market for two years, so that’s obviously good, and it’s no surprise that stocks (especially the broad market) catapulted on that news. With all of that said, it’s important to keep your feet on the ground; we’re not expecting a major dip, but it’s certainly possible stocks could wobble a bit or we could see some rotation now that the good news is out. Even so, the rubber-meets-the-road evidence is strongly positive; we’re moving up our Market Monitor to a level 8.

This week’s list is a balanced one, with some growth, some cheap names coming back from the depths, some cyclicals and more. Our Top Pick is a Bull Market stock that should do very well if this advance continues. Try to buy on dips.

In our final issue of 2023, we try and capitalize on the red-hot, Fed-fueled (for once) market by adding a growth play that is resurgent in a post-Covid world. It’s a brand-new recommendation from Mike Cintolo in Cabot Top Ten Trader. It should be a nice addition to a Stock of the Week portfolio that has plenty of shiny objects as we close out the year. Enjoy – and happy holidays!

We currently have one open position, a SPY bear call spread due to expire in the January 19, 2024, expiration cycle. My hope is to add one, if not two more trades for the January 31, 2024, expiration cycle. The challenge is finding a highly liquid ETF or stock with a decent IV rank, and therefore, at least in most cases, some decent options premium. If premium just isn’t there, we might have to extend the duration on the trade, possibly going out to the February 16, 2024, expiration cycle. Either way, I intend on adding an iron condor, and hopefully a bull put spread to the mix. Of course, a slight pullback would make things easier.

We allowed our PFE calls to expire worthless at expiration last Friday, locked in some decent premium and plan to sell more call premium early this week. Expect to see a trade alert either today or tomorrow.

We also allowed our DKNG puts to carry through expiration and as a result, per our income wheel approach, we were assigned shares of DKNG. Now that we are in the covered call phase of the income wheel approach in DKNG, like PFE, we plan to sell calls against our newly acquired shares today or tomorrow.

Additionally, I intend on introducing a new position in WFC, or another fairly low-priced big bank stock, by selling puts early this week. My hope is we get a short-term pullback before entering a new position.

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.

January inflation came out. It wasn’t good. Is this rally doomed?

It has been a good year so far in the market. The S&P 500 is up about 8% and the Nasdaq has rallied more than 13% in just the first six weeks of this year. Stocks have been lifted by optimism of a soft landing.

For the first time that I can remember, I didn’t watch the Super Bowl. We had been skiing all weekend in New Hampshire, and I was EXHAUSTED. I think our entire household was asleep by 8 p.m. It sounded like an incredible game, but I’m not upset I missed it. An amazing night of sleep was worth it. Maybe that means I’m getting old?

A few weeks ago, we introduced the Gartner Hype Cycle, which traces the path that all tech companies follow in what essentially is an immutable law of tech investing. Currently, tech stocks have passed the Peak of Inflated Expectations and are sliding down to the Trough of Disillusionment. A few will ascend back to prosperity along the “Slope of Enlightenment” if they maintain both their relevance and their competitive edge. But most will lose one or both of these traits and thus continue downward in what could be labeled the “Decline into Oblivion.”

Stocks are bracing for the January inflation report, which comes out today. The number could determine the next thrust of the market.

It’s been a good year so far for stocks, despite the slight pullback last week, as investors embrace the notion of falling inflation and a Fed that will finish raising interest rates around midyear. But a bad inflation report could put the kibosh on that optimism and send stocks reeling.

This week, we comment on earnings from Adient (ADNT), Brookfield Re (BANR), Brookfield Asset Management (BAM), Goodyear Tire (GT), Mattel (MAT), Newell Brands (NWL) and Western Union (WU).


Next week, Toshiba (TOSYY), TreeHouse Foods (THS), Conduent (CNDT), Ironwood Pharmaceuticals (IRWD) and Organon (OGN) report earnings.

This week has been taking place in the shadow of last week’s market-moving events.

Of course, I’m talking about the FOMC meeting and the resulting 25bps hike, followed by Jerome Powell’s press conference where the term “disinflation” reverberated around the conference room over and over. The event sent the market higher in a risk-on rally that extended the move from the day before.

Throughout U.S. history, federalists and states’ rights advocates have battled it out. Federalists believe in strong centralized power. The other side wants issues to get resolved locally. Federalists are usually on the left, and states’ rights advocates are normally conservatives. But not always. It depends on the issue.

The market is making some noise so far this year. And in a good way. The S&P 500 is 7.7% higher and the Nasdaq is up 14.7% YTD. Is this real, or just another head fake?


The rally is being prompted by increasing optimism of a soft landing, where inflation falls without the economy falling into recession. Previously pessimistic pundits are now embracing the possibility. And there is some evidence to back up the soft-landing scenario.

This week, we comment on earnings from Janus Henderson Group (JHG), Meta Platforms (META), M/I Homes (MHO), Polaris Industries (PII), Vodafone (VOD) and Western Digital (WDC).


Next week brings earnings from Western Union (WU), Mattel (MAT), Brookfield Re (BANR), Goodyear Tire (GT) and Newell Brands (NWL).

There is almost no premium left in our PFE December 16, 2022, 45 puts. As a result, I want to buy back the 45 puts and sell more premium in January.

I’m going to lock in some nice profits today and as a result, our win ratio is now 18 out of 19 winning trades since starting the service back in June. I’ll also be adding a few new trades to the mix over the next day or two, so be on the lookout for an opening trade alert.

We’ve only held Treace Medical (TMCI) for about a month, but it’s been a wild ride.

Today SWAV has dipped below support near 235, triggering my mental stop-loss level.

I’m going to lock in some nice profits today and as a result, our win ratio is now 18 out of 19 winning trades since starting the service back in June. I’ll also be adding a few new trades to the mix over the next day or two, so be on the lookout for an opening trade alert.

The market got off to an ugly start to the week yesterday, though really not much has changed—the Tides are positive, but not much else is, while individual growth stocks remain hit or miss.

Snowflake (SNOW) reported late last week that Q3 revenue rose 67% to $557 million (beating by $18.1 million) while adjusted diluted EPS of $0.11 beat by $0.06.

Cannabis stocks are screaming higher this morning. Our AdvisorShares Pure US Cannabis (MSOS) ETF is up over 8%. Three of our portfolio names are up even more, 9% to 15%.

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.