This year’s strong market has surprised most pundits. Hopefully, the good times last. Anything is possible.

I don’t want to get into the business of trying to predict what the market will do over the rest of the year. Even if you get things right, some stupid headline can come out of nowhere and change all the math. There’s a much better way than market timing.

Buying good stocks cheap is perhaps the best way to assure good returns over time. Different market sectors go in and out of favor all the time. Technology stocks were out of favor at the beginning of this year. No one wanted energy stocks at the beginning of 2021.

You may not think there are a lot of bargains anymore. Sure, it’s a bull market for the indexes. But it is still the darkest days of the bear market in certain places. Defensive stocks in utilities and other sectors are wallowing near the lows of last October while the indexes are whooping it up.

In this issue, I highlight three defensive portfolio positions. These stocks are all selling near 52-week lows and, in some cases, multi-year lows. But operational results at these companies have been as strong as ever. And all these currently out-of-favor stocks have long histories of superstar performance that blows away the returns of the overall market.

Forget the Fed, and inflation, or the velocity of the landing. Buying some of the very best dividend stocks on the market near the lowest valuation at which they ever sell should be a money-making strategy regardless of what happens with all that other stuff.

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.

Some of the positives that we saw in the latter half of August are still hanging around, not the least of which is a good amount of resilience from growth stocks that popped higher on earnings or otherwise saw good-volume buying. That said, the market as a whole doesn’t look ready, with last week bringing another round of selling in the broad market and the major indexes—the intermediate-term trend never could turn up, and few stocks are really moving up at this point. Long story short, there are some encouraging pieces of evidence, but more patience is likely needed. We’ll leave our Market Monitor at a level 6.

This week’s list is pretty well-rounded, with stocks from a variety of groups and of different sizes and profiles. Our Top Pick is a clear winner in the drug space with two big sellers; we’re OK grabbing a few shares here or (preferably) on dips.

Stocks took a predictable early-September hit last week, but the damage was minimal, and it appears the indexes want to go up – pending the results of this Wednesday’s inflation data, of course. Chinese stocks, meanwhile, haven’t gone anywhere but down for a while, but today we take a contrarian view by adding a big-brand Chinese company that Carl Delfeld just added to his Cabot Explorer portfolio. Sure, China’s economy has underwhelmed, but that’s not likely to be the case for long. And today’s addition is poised to lead China’s recovery.



Details inside.

The earnings doldrums are upon us, but we still have a few potential opportunities this week, most notably a chance for a trade in Oracle (ORCL). The company is due to announce after the closing bell today, so if a trade alert is sent, expect to see the alert around 2 p.m. ET.

The beginning of this week is going to be busy as I plan to buy back positions in DKNG, PFE and KO, lock in profits and immediately sell more options premium.

Our other positions are working through their respective expiration cycles using our “income wheel” approach. That being said, we do have one position, WFC September 15, 2023 45 puts, that will most likely close in-the-money at expiration this Friday. If that does occur, no worries, we will be assigned shares of WFC (100 per options contract) and immediately begin the covered call portion of our “income wheel” strategy.

We added another trade to the mix this past week and thankfully, at least so far, both our current trades are in profitable territory. We have the ability to take our SPY iron condor off the table for just over 8% and with 40 days left until expiration, it might not be a bad decision to lock in those profits. As for our IWM iron condor, we are early in the trade, and even though we have a chance to lock in some early profits, those profits are minuscule at the moment, so we will continue to hold in hopes of taking the trade off the table (for profits) over the next two to three weeks. Our total profits are just over 150% and the hope is we can add another 15% to 20% prior to the next expiration cycle.

The market rally in 2023 and recent pullback have left the All-Weather portfolio up a respectable 6.5%, with the Vanguard Total Stock Market ETF (VTI) continuing to do the heavy lifting, up 25.2%.

Nothing has changed from last expiration cycle, both bond funds (TLT and IEF) and the commodity fund (DBC) continue to lag behind, but that is the yin-yang protective nature of the All-Weather portfolio just doing its job. That being said, all of our positions are outperforming their respective ETF benchmarks, once again showing the power of using a poor man’s covered call approach.

Partially aided by declines in mega-cap technology stocks Apple (AAPL) and Nvidia (NVDA), both of which lost 6% last week, the holiday-shortened week was not particularly kind to the bulls as the S&P 500 fell 1.3%, the Dow lost 0.75%, and the Nasdaq declined by 2% last week.

Partially aided by declines in mega-cap technology stocks Apple (AAPL) and Nvidia (NVDA), both of which lost 6% last week, the holiday-shortened week was not particularly kind to the bulls as the S&P 500 fell 1.3%, the Dow lost 0.75%, and the Nasdaq declined by 2% last week.

The market showed some promise in the past couple of weeks, but our indicators never could turn up and now the sellers are back at it, driving the broad market back down. All in all, then, the correction that started in earnest in early August remains in place, so we’re remaining relatively cautious. To be fair, there are some positives, not the least of which is growth stocks, many of which reacted well to earnings last week and a bunch have been resilient of late. That’s not enough to start a buying spree, but it’s another sign that there should be fresh leadership to sink our teeth into whenever the correction finishes up.

In tonight’s issue, we talk about one fundamental transition that three potential leaders are in the midst of, review our Growth Tides and go over a bunch of enticing candidates, be them cyclical or growth stocks.

China’s economy is struggling due to lackluster growth, falling property prices, high local debt, poor demographic trends, and lack of consumer confidence. In some ways, my thought is – join the club. The U.S. may be facing 2% GDP growth and has its own challenges such as excessive federal spending and national debt. My point is that we should remain skeptical but not discount China coming back strong with the right policies. In my view, China is both strong and brittle. And today, we add a high-profile stock that’s a play on China’s strength.

The stock market continues its downward slide as investors started to fully appreciate the pace and scale of rate hikes by central banks around the world. Still, several of our companies provided noteworthy updates, noted below and in our podcast.

Well, the market got exactly what it expected yesterday when the Fed hiked by 75bps (the odds were over 80% that’s what they’d do). Fed Chair Jerome Powell’s messaging was consistent with what he said back in August in Jackson Hole.

FedEx (FDX) reports earnings later today and all will be watching as its shares tumbled last week after it issued a sales warning. The Federal Reserve issued its fifth interest rate hike of 2022, and it certainly won’t be the last one, warned dove-turned-hawk Fed Chairman Jerome Powell. This brisk run-up in rates, which should have been earlier and faster, is hitting growth stocks hard since those are mostly high revenue growth companies that are not yet profitable. The market is punishing this group to levels that tempt longer-term investors.

It’s all about the Fed today. The woefully behind-the-curve Central Bank will announce another Fed Funds rate hike today. The increase is widely expected to be another 0.75%. But some worry it could be 1.00%.

The market’s hopes were dashed when August inflation was worse than expected. That means the Fed will have to continue to be hawkish and for a while longer. Plus, after four rate hikes so far, two straight quarters of GDP contraction, and a bear market; inflation isn’t budging yet.

The market has turned decidedly negative after last week’s worse-than-expected inflation report. This week, all eyes are on the Fed.

The Fed is widely expected to raise the benchmark Fed Funds by 0.75% for the third straight time. But some Wall Street types are worried that it could be a 1.00% hike. In the grand scheme of things that’s not a big difference. But Wall Street suffers from short-sightedness. And not the kind that can be corrected with glasses.

Central banks around the world are boosting interest rates at a pace faster than perhaps any other time in living memory. Since mid-March, only six months ago, the U.S. Fed Funds rate has surged from essentially zero to about 2.35% and will be at 3.0% by the end of this week.

Given the volatility of September, I want to revisit my “bear market” analysis.

One of the most aggressive Federal Reserve rate-hiking cycles ever is weighing heavily on gold, with another rate increase expected this week. On top of that, continued strength in the dollar index and rising yields in longer-term Treasuries (a major competitor for gold) are causing bullion investors to run for the exits.

While the market’s fireworks around the CPI data overshadowed most everything else this week, a few of our companies provided noteworthy updates, noted below and in our podcast.

Tuesday’s CPI report served up a 0.02% miss, which sent the market into a tailspin. The Nasdaq fell more than 5%, its worst day since 2020. The S&P 500 Index fell 4.3%. And small caps? The S&P 600 fell 3.9%

As of 2 pm EST, The market was mostly lower, though modestly so, with the Dow up 33 points, but the Nasdaq down 85 points and most growth stocks in the red.

As discussed in our weekly issue last week, and on our weekly call, I will be taking a position in American Express (AXP) today.

As the internal condition of the broad equity market shows gradual improvement while short covering continues, I think it’s time we turn our attention to stocks and ETFs that are in a position of relative strength compared with the rest of the market.

Despite being a sloppy mess, the market has offered up some opportunities since May, when a lot of stocks might have put in a workable bottom. However, with the jury still out on that call and a still extremely uncertain environment, I’m taking a “bird in the hand is worth two in the bush” mentality with a few of our names while also looking to keep our portfolio from swelling to an unmanageable size.

As part of the Income Wheel approach, we allowed our BITO and GDX puts to expire in-the-money at expiration last week. As a result, we were issued shares at our chosen put strikes.

On Friday the July calls that we sold against our JD and EQT stock positions expired worthless. Today, both stocks are trading higher, and I want to sell a new set of calls against each. Here are those trades, and approximate prices.

Today is the expiration of five of our July covered call trades. And despite the market having some ups, and even more downs, the Profit Booster portfolio had a pretty good month. Let’s dive in …

JPM looks to open the day well within our range of 103 to 120. As a result, I want to take the trade off for a profit. I will discuss the trade further in tomorrow’s subscriber-exclusive webinar.

After closing out our SPY bear call spread (albeit prematurely) for a decent profit yesterday, I want to continue to take advantage of the inflated volatility that resides in the S&P 500 by adding another iron condor to the portfolio.

I’ve decided to go ahead and buy back our short calls in IEF and VTI for the opportunity to sell more premium in August. Both short calls in IEF and VTI have little to no premium left, so now is as good a time as ever to sell more premium in both underlying ETFs.

We are moving shares of Credit Suisse (CS) from Buy to Sell.

Alliance Resource Partners (ARLP) is now up 12% from our initial entry point as of Wednesday, which means it’s time to take some profit off the table per the rules of our trading discipline.

For many months, I’ve been telling you what a bargain the leading cannabis stocks have become, and now it appears that increasing numbers of investors have come to the same conclusion, as selected stocks have lifted off their bottoms, with some even climbing above their 25-day moving averages.

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.