We have six positions that are due to expire within the next two to three weeks. As it stands, at least so far, all of our positions are in great shape. Going forward, my intent this week is to add a few more income-generating positions to the mix. I’m looking at a higher volatility play as well as a few more lower beta stocks and ETFs with lower implied volatility as well. Remember, we not only want to diversify our approach using uncorrelated assets, we also want to vary our levels of volatility throughout the portfolio.

Okay, everyone, the wait is over: Earnings season is back. While the next few weeks will start rather slowly for earnings announcements, we should still see two to three trades before earnings season begins to truly pick up.

This week we have the big banks kicking things off, per usual. My hope is that we can get one, if not two trades off this week. As always, I’ll be focusing on stocks in the weekly watch list below, with Citigroup and JPMorgan Chase at the forefront.

Our SPY bear call spread is due to expire in 10 days. The probabilities on the trade stand at roughly 74% with two weeks left until expiration. A push lower early this week and we should be able to lock in a nice return on the trade.

I also plan on adding an iron condor to the mix this week and potentially a bull put spread in one of the stocks we follow on our watch list. Some stocks, unlike most indexes, have seen a return of volatility, as reflected by their higher IV ranks, so there is a good chance we will pounce on one of those opportunities this week.

2024 got off to a somewhat rocky start as the S&P 500 fell 1.8%, the Dow lost 0.6% and the Nasdaq lost 3.5%. And while the indexes fell there is rarely much to learn from the first week of the year as this week is often “wonky” as traders rotate from one sector to the next, and tax-related trading can move money out of recent winners.

2024 got off to a somewhat rocky start as the S&P 500 fell 1.8%, the Dow lost 0.6% and the Nasdaq lost 3.5%. And while the indexes fell there is rarely much to learn from the first week of the year as this week is often “wonky” as traders rotate from one sector to the next, and tax-related trading can move money out of recent winners.

Although markets have stumbled a bit out of the gate, investors looking to see the S&P 500 build on the 11% advance in the final quarter of 2023 may not have long to wait. U.S. companies are due to start reporting results next week, with the big banks leading the way.

An election year like 2024 with a sitting president running is historically a bullish scenario for U.S. stocks. Since 1949, the S&P 500 is averaging a gain of nearly 13% in those election years, per the Stock Trader’s Almanac.

So let’s kick off the year by adding another aggressive growth stock.

This month we’re jumping into a small software company that provides solutions for a specific small- and mid-sized business (SMB) market.

While the market for SMB software has been tough for the last two years, this company’s revenue growth has accelerated and customers that bailed in 2022 are coming back. In short, best-of-breed software isn’t dead! And this player is about to become profitable too. Enjoy!

After a big run higher for the market to end 2023, 2024 got off to a rough start yesterday, especially for growth stocks. And while yesterday was sloppy, this action isn’t terribly surprising as crosscurrents in the new year are typical.

Happy New Year! Now that the calendar has flipped, early January is upon us, and as we saw today, that’s almost always a tricky time: There are many crosscurrents that pop up, and when you combine that with the market’s straight-up move since the start of November, today’s sour (and rotational) action wasn’t a total surprise and is a reason why we’ve been advising picking your spots of late. If you’re looking for something to worry about, we’d say that growth stocks (which led the way up in November) stalled out three weeks ago, so if the selling continues, that could be a canary in a coal mine of sorts—but at this point, we’re seeing normal (albeit unpleasant) downside action in many stocks. Right now we’re thinking the next couple of weeks will likely prove tricky, yet the path of least resistance remains up. We’ll keep our Market Monitor at a level 8, though we’ll be in touch if that changes.

This week’s list has something for everyone, from newer names trying to emerge to established leaders that have rested for two or three weeks. Our Top Pick has moved out on the upside and has excellent numbers, all while its sector remains in favor.

Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the January 2024 issue.

We review the stock market’s remarkable performance in 2023 and highlight our recommendations that produced notable gains along with our clunkers. Our view on the 2024 market is that stocks will have an average year, with the Magnificent Seven producing flat/modest returns at best. Readers should keep in mind quotes from Yogi Berra and Warren Buffett when considering market forecasts. Onward to 2024.

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

Happy 2024! Here’s hoping the new year can pick up right where the old one left off. There are plenty of reasons to think this year will be good for stocks – the Fed cutting interest rates instead of hiking them, inflation cooling, recession fears fading, etc. But there’s no doubt a few sectors (tech?) are a bit overcooked at the moment, at least in the short term. So we kick off the new year by doing a bit of bargain shopping, starting with the most bargain-basement sector out there: cannabis. We haven’t had much luck trying to buy into strength with cannabis. So today, we instead buy after the sector has been knocked back again, adding the largest holding from Michael Brush’s Cabot Cannabis Investor portfolio.

I hope all of you had a wonderful New Year’s and holiday season! Now it’s time to get back to it!

As I stated last week, my hope is to add one if not two more trades for the January 19, 2024, expiration cycle, although with volatility on the low side, we might have to go out a bit further in duration. The challenge when volatility is low is finding a highly liquid ETF or stock with a decent IV rank, and therefore, at least in most cases, some decent options premium. So again, 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.

Happy new year! Hope you were able to take some time off to re-charge and get ready for the new year. I enjoyed my time off, but December has been a month of sickness for the Howe family. Covid, ear infections, colds – you name it, my family got it. Here’s to a (hopefully) healthier January! This week was another very slow week from a micro-cap news cycle perspective.

This year begins in 2022 form, lower. Although the calendar changed, the issues that have pressured stocks lower over the past month remain. There is still great uncertainty regarding inflation, the Fed, and a recession.

This note includes the Catalyst Report, a summary of the December edition of the Cabot Turnaround Letter, which was published on Wednesday, and earnings from Duluth Holdings (DLTH).

I hope you’ve been having a good holiday season and are looking forward to a New Year. I know I am, especially considering the rough year for the stock market. It’s time to move on!

Another year is coming to an end. It was a crummy year for the market. The current roughly -20% YTD return for the S&P 500 with two days left marks the worst yearly performance for the market since 2008.


Although it’s been a tough year for stocks, history strongly suggests that 2023 should be a lot better. In the last 42 years, there have only been 7 calendar years of negative market returns and 35 years of positive returns. Of those 7 negative years, 5 were followed by years when the market rebounded at least 20%.

For most people, investing during a bear market is a frustrating experience. Share prices keep going down, profitable positions erode in value, new purchases become money-losers. Short upward bursts in market sentiment bring hope for a new bull market, but these fade quickly. The temptation is to sell everything and wait for better times.

I hope you’re having a wonderful holiday week. I celebrated Christmas with my wife and kids (Gracie-7 and Tripp-4), as well as my parents and in-laws. I’m lucky because we all live in the Boston area – so travel was minimal. We enjoyed tons of good food and wine.

This week there were no earnings reports, so most of the note and podcast cover relevant news on our recommended companies.

After a decent bounce yesterday, the market is coming undone today after a couple of poor earnings reports and a continuation of the general malaise out there.

Portfolio Changes: Infineon Technologies (IFNNY): FROM BUY A HALF TO HOLD


Centrus Energy (LEU) shares were up a point this week but the Zacks Consensus Estimate for its current-year earnings has been revised 21% downward over the last 60 days. This is still a buy for aggressive investors as interest in expanding nuclear power gains momentum.

Small-cap stocks continue to trade in the same 5% range that they’ve been in for the last month. On the S&P 600 Small Cap Index that translates to a range of 1,184 – 1,252. At the low end of that range we have the upward sloping 50-day line.

This year stunk. Next year should be better. Remember that if the market falls to a new low early next year.

There are some very good reasons to believe the market will turn around in 2023. Stocks trend higher over time. The average bear market lasts around 15 months. This one is almost a year old. Of the seven negative-returning calendar years for the market since 1980, five were followed by years of returns of over 20%.

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.

With only 16 days left and quite a few important data points being released over the next week or so, I’ve decided to take off our iron condor in IWM for a small profit. I will be reestablishing a new iron condor most likely tomorrow or Monday for the October expiration cycle. If you choose to hold on, please be aware of the risks.

I plan on rolling several more of our short call positions, EFA and EEM to name a few, over the next two days. But today, I want to go ahead and roll our CVX and DBC calls. I also plan on adding several new positions to our Growth/Value Portfolio and Buffett Portfolio. Stay tuned!

Our BITO 16.5 calls for the September 23, 2022, expiration cycle are essentially worthless. Same goes for our GDX 28 calls.

Today, given the extreme oversold readings, I’m going to open a position in the Nasdaq 100 ETF (QQQ), more specifically a bull put spread. I also intend on adding several more positions for the October 21 expiration cycle over the coming days.

I will be rolling several more of our short calls at the beginning of next week. Stay tuned as I will be sending out several trade alerts on Tuesday and Wednesday.

The market today is like fertilizer for grey hair. In theory, it should be stronger than it has been. After all, this morning’s manufacturing data showed prices continue to come down (i.e., supply/demand balance getting better) while new orders remain stable. We also see oil prices down. So, inflation pressures seem to be easing (still) but growth isn’t tanking (yet).

We currently own the TLT January 19, 2024, 85 call LEAPS contract at $29.10. You must own LEAPS in order to use this strategy.

We currently own the GLD January 19, 2024, 145 call LEAPS contract at $37.00. You must own LEAPS in order to use this strategy.

Several of the short calls in our poor man’s covered call positions have little to no value due to the sharp decline that began in earnest last Friday. As a result, I want to buy back several of our short call positions and sell more premium while volatility is high. I’m going to start with SPY, but expect to see more alerts before we close out the week.

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 Momentum 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 Momentum Trader features.