We decided to place our third trade of the season in Mastercard (MA) by using a 47.5-point range, with our short strikes at 360 (puts) and 407.5 (calls). We felt comfortable with the range as it was not only well outside of the expected range (370 – 400) for MA, but covered, on a percentage basis, almost every earnings move going back to November 2011. These are the type of setups we prefer to trade.

As discussed over the past few weeks, we finally added the SPDR Utilities ETF (XLU) to the portfolio, which now gives us seven total income-producing positions. My goal is to have 8 to 10 positions, so we’re almost there. I plan to add another position this week, but I’ll be taking the opposite approach. I plan to add a stock or ETF with a little higher IV to give us the opportunity for greater options premium. As I’ve stated in the past, I like to diversify by not only using uncorrelated assets, but to use assets with varying levels of implied volatility.

There is no sugar coating it, the market had a very bad week as the S&P 500 fell 2.5%, the Dow lost 2.14% and the Nasdaq declined by 2.6%.

There is no sugar coating it, the market had a very bad week as the S&P 500 fell 2.5%, the Dow lost 2.14% and the Nasdaq declined by 2.6%.

Cannabis stocks are trading like a group in need of a catalyst.

* The AdvisorShares Pure U.S. Cannabis (MSOS) exchange traded fund (ETF) has fallen 28% from the peak of the rally caused by last summer’s news of federal government progress on rescheduling.

* The AdvisorShares MSOS 2x Daily (MSOX) ETF is down 38%.

Will the group see a catalyst soon? I put odds at much higher than 50%. This makes cannabis stocks a buy in the current retreat, both for a trade but also as a medium-term, multiyear position.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the November 2023 issue.

Much of the art of finding interesting turnaround stocks is looking at catalysts, tracking management changes and searching through lists of out-of-favor companies. Sometimes, however, good ideas can be found closer to home – literally – by looking through the roster of public companies in one’s home state. We discuss five turnarounds underway in our home state of Massachusetts.

Despite near-record gold prices, shares of gold producers remain depressed. We discuss two attractive companies. Our Buy recommendation this month is Agnico Eagle Mines Ltd (AEM), a premier gold mining company selling at a discounted price.

Please feel free to send me your questions and comments. This investment letter is written for you. A great way to get more out of your letter is to let me know what you are looking for.

Ahead of the long holiday weekend the market had yet another good week. The S&P 500 gained 1.75%, the Dow rallied 1.5%, and the Nasdaq rose another 1.9%.

This week in an attempt to diversify the portfolio we are adding an energy play.

The market has been choppy and unpredictable. Optimism about a “soft landing” is being tempered by rising interest rates. Either the strong economy or high interest rates will dominate the market in the months ahead. We’ll see.

But what seems to be quite clear is that the economy is solid for now. Third-quarter GDP is expected to be over 5%. Even if the economy does slow, it will likely take several quarters to slow from here. That means gasoline demand should remain solid. And that should be good news for refiners.

In this issue I highlight one of the best performing large company stocks in the energy sector over the last several years. It is also one of the few plays out there that still has solid momentum, as the stock remains in an uptrend that began three years ago.

Good momentum means high call premiums as more investors are willing to be on higher prices in the future. The refiner stock highlighted in this issue has a great chance of providing the opportunity to sell covered calls in the near future. It should help generate a high income in this uncertain environment.

The market has continued to unravel, and there’s no need to review all the gory details from the prior few days—suffice it to say that the trend of interest rates remains up and the trend of most indexes, stocks and sectors remains down. It’s also true that emotions are starting to run high, with a few signs of panic out there as investors throw most everything overboard, bringing lots of stuff down to key levels. Because of that, we remain on the lookout for some sort of market turn, but until then, we advise holding plenty of cash and keeping any new positions on the small side as we wait for the sellers to run out of ammo. We’ll respect the latest leg lower and drop our Market Monitor to a level 4.

This week’s list is a great place to start building your watch list if you haven’t already, with many names that are clearly resisting the market’s pull. Our Top Pick is a tech name that looks to have the right mix of steady growth, big earnings expansion and huge AI potential—as well as a resilient stock.

The market is in a tough place right now, closing last week at new post-summer lows. At some point – perhaps sooner than we expect – the next rally will arrive. And there are a lot of indicators (overly bearish investor sentiment, a history of October bottoms, etc.) that suggest the next big move is up. But we have to see it to believe it. So, for now, we’ll maintain a relatively cautious stance, trimming an underperforming position today and downgrading another to Hold.

And yet, there are enough glimmers of hope out there (remember: it’s still technically a new bull market!) that today we’re adding a mid-cap software company with tons of growth potential, recently recommended by Tyler Laundon in Cabot Early Opportunities.

Details inside.

As October expiration moves into our rearview mirror, our total returns sit at an all-time high of 165.8%. For the expiration cycle we were able to lock in two iron condors (SPY and IWM) for a total return of 19.8%.

We allowed our three remaining October 20, 2023, positions to expire.

Our DraftKings (DKNG) puts closed in-the-money and as I discussed last week on our subscriber-only call, I plan to sell calls against our newly issued shares in DKNG on Monday.

Both our Wells Fargo (WFC) and Pfizer (PFE) call positions expired worthless, so we locked in all of the premium and we needed it to offset some of the losses in both stocks. I plan to sell more calls against both positions on Monday.

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.

As far as our portfolio goes there is very little that’s changed since last week.

Last week, we rolled our valuation and earnings estimate table forward by a year, dropping the 2022 estimates and adding the 2024 estimates.

There are a couple of things that I’m thinking about this week.

First, the yield curve is inverted. An inversion of the 10-year – three-month yield curve has predicted all of the last recessions, and so I have high confidence that we will see a recession in 2023.

With that being said, usually, the market performs better in the year of the recession than in the year before the recession (markets are forward-looking!).

As such, I’m relatively optimistic.

Today I am adding $40,000 of our cash to AdvisorShares Pure US Cannabis (MSOS) with a buy limit of 11.45.

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.

Cabot Options Institute Fundamentals is focused exclusively on the Poor Man’s Covered Call strategy, which is a way to collect reliable gains from a relatively simple options strategy, without the substantial up-front cost of a regular covered call strategy.

Macy’s (M) – With a capable new CEO since February 2018, Macy’s is aggressively overhauling its store base, cost structure and e-commerce strategy to adapt to the secular shift away from mall-based stores. Macy’s acceleration of its overhaul shows considerable promise.

As far as today goes, the S&P 600 Small Cap Index has come up against a wall at 1,230, which is where support was in January and February.

Centrus Energy (LEU) shares recovered five points this week to reach 35 as the Department of Energy announced that it and Centrus Energy’s American Centrifuge Operating, LLC will share the $150 million cost 50-50 to demonstrate production of a fuel called high assay low enriched uranium. This is still a buy for aggressive investors.

Over the past couple of weeks, there have been a couple big news items:

• The collapse of crypto exchange, FTX.
• The market rallying on lower-than-expected inflation.

The collapse of FTX has nothing to do with micro-caps, but it’s a fascinating story. I can’t wait to read the Michael Lewis book on it (apparently, he’s been working on the book for the last 6 months).

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

With the market looking iffy, the Fed on tap next week and a new Issue slated for Wednesday, I’m going to reduce our exposure a little today by selling Samsara (IOT).

August and September have brought plenty of ups and downs for the stock market, and not surprisingly the Profit Booster also had its ups and downs. One of our trades didn’t work, two are good, and two will expire for full profits. Let’s dive in …

We currently own the EEM January 19, 2024, 30 call LEAPS contract at $11.50. You must own LEAPS in order to use this strategy.

We placed our SPY trade on September 9th for $0.75, now it stands at $0.25 with 36 days left until expiration.

Shares of steel producers plunged on Wednesday after Nucor (NUE) said it expects third-quarter earnings to come in under Wall Street’s estimates.

We’re going to step away from Ingles Market (IMKTA) today and book a modest, single-digit loss on the name. I’ve had IMKTA on a short leash following the stock’s reversal soon after it hit an all-time high on August 23.

Greetings. I’d like to intro myself as the new editor of Cabot Sector Xpress Cannabis Advisor.

With the Russell 2000 ETF (IWM) trading for 183.51, I want to place a short-term iron condor going out 38 days. My intent is to take off the trade well before the October 21, 2022, expiration date.

We just placed our QQQ bull put spread two days ago, but with 42 days left until expiration and the ability to lock in over 50% of the original premium sold I intend on taking off the trade and establishing a few new trades over the coming days, possibly even later today.

With the market rallying this week and back into a short-term overbought state, I want to add a bear call spread to the mix. I’ll be adding an iron condor and potentially another bull put spread to the mix early next week.

Desalination equipment maker Energy Recovery (ERII) settled at 25.55 Thursday, a breakout over 25, which is the move we’ve been watching for.

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.