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.

It was a strong October in the market with the S&P 500 up more than 6% for the month. But the index was up over 8% in the second half of the month after recovering from the low.

What’s going on, and can it last?

Part of this rally is a bounce off the low, which is normal for bear markets and has already occurred several times this year. But there are glimmers of hope that the market may have already bottomed. That hope is largely predicated on the notion that we may be at the peak of the Fed’s aggressiveness. All eyes will be on the Fed this week for confirmation.

It’s all about the Fed right now. The recent rally in stocks may continue or abruptly end based on what the Central Bankers say today.

Today is the Fed’s November meeting where the way-late-to-the-party inflation tamers are widely expected to raise the Fed Funds rate another 0.75% for the fourth time this year. That’s baked into the cake. The main event today will be what the Chairman says about the future course of rate hikes.

The biggest news over the past couple of weeks has been the disappointing results from big tech.

This note includes the Catalyst Report, a summary of the November edition of the Cabot Turnaround Letter, which was published on Wednesday and earnings updates on 12 recommended companies.

WHAT TO DO NOW: Remain defensive, but be ready to take some action. From a top-down perspective, the market is improving, with our Cabot Tides on the verge of a green light. However, individual stocks remain a mine field, with many acting better but plenty of blowups, including many high-profile names, like Meta (META) today and our own Wolfspeed (WOLF), which collapsed today after earnings; we sold our shares earlier today via a special bulletin.

A couple of weeks ago the S&P 600 SmallCap Index was trading at a greater than 25% discount to the S&P 500 on a forward PE basis.

The market has been a lot better over the past week. The reason is earnings.


So far, earnings have been better than expected this quarter, although it’s still early. The hope is that a soft landing is still possible, at least as far as corporate profits are concerned. The early better-than-feared results are prompting hope that corporate profits can weather this recession with less damage than has already been priced into stocks.

I’d like to thank each of you for your interest in renewable energy, decarbonization and ESG investing. I remain a steadfast believer in the long-term transition to clean energy and the profits that it will offer to investors. Since I began investing in the sector in 2007, I’ve never been more optimistic about its future, regardless of the markets right now.

With the arrival of earnings season and perhaps some indications that the 10-year US Treasury yield will peak at around 5%, the broad stock market appears to have found at least momentary stability. Whether this is just another “eye of the storm,” or a true end to the bear market, is unknown and unknowable.

This week was another relatively slow one. However, we did have two companies report earnings.

Due to changing business conditions, Cabot has decided to end the SX Crypto Advisor publication. I want to personally thank everyone who subscribed and tuned in to our webinars. It has been a pleasure to provide you with this research content, I hope you enjoyed reading despite the tough year in the markets.

You will receive further information from the company regarding this closure process.

I will be exiting the CAT trade today. I will discuss the trade in greater detail in our upcoming subscriber-exclusive webinar, at noon ET this Friday.

With 22 days left in the August 19, 2022 expiration cycle we are able to lock in well over 50% of the original premium sold in GLD back on July 8.

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

Geothermal energy producer Ormat Technologies (ORA) closed Friday at 86.54, above our target for a breakout. We are shifting the stock from ‘Watch’ to ‘Buy’ for Monday.

Let’s Ring The Register With GO. MTDR Moves To HOLD

We currently own the DBC January 19, 2024, 22 call LEAPS contract at $10.50. You must own LEAPS in order to use this strategy. If you wish to enter the position and are uncertain about which LEAPS to purchase, please refer to the reports section of your subscriber page, or our latest subscriber-exclusive webinar in which I go through the process, step by step, of entering a new position on an already established position.

I’ve decided to go ahead and buy back our short calls in GLD, DBC, VNQ and VTI for the opportunity to sell more premium in September. I will be sending the trades in two separate alerts to make it a little more manageable. I’ll start with GLD and VTI in this alert…

With 22 days left in the August 19, 2022 expiration cycle we are able to lock in well over 50% of the original premium sold in GLD back on July 8.

MSFT opened the day within our range of 227.5 to 270. However, MSFT has pushed higher throughout most of the day and has hit our stop-loss. As a result, I am going to exit the trade for a small loss. I don’t want to take a what is now a small loss and turn it into something larger. I will discuss the trade further in our upcoming subscriber-exclusive webinar, at noon ET this Friday.

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

Microsoft is due to announce after the closing bell today.



Iron Condor Earnings Trade in Microsoft (MSFT)

In today’s trade alert I want to sell cash-secured puts in JPMorgan (JPM).

I want to close out our IWM iron condor today for $0.34.

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.