Not much to say as we enter another holiday-shortened week, so I’m going to keep the message consistent with last week. 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.

I hope everyone had a wonderful New Year!

As we move through another holiday-shortened week, it should be no surprise that there is little in the way of earnings announcements the first week of the year. But the action will pick up in earnest in less than two weeks.

Happy New Year! The market remains in great shape, with the vast majority of evidence positive—and, given that we are coming off of two years in the muck, with big declines in 2022 and (for the most part) lots of bottoming-out action in growth stocks and the broad market in 2023, we see great potential going ahead for a real bull phase. That doesn’t mean we’re complacent or leaving our brain at the door, but we’re leaning bullish and putting money to work. Tonight we’ll add one half-sized position in a leveraged long index fund, leaving us with around 20% in cash.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the January 2024 issue.

In this issue, we discuss our Top Five Stocks for 2024. We also dissect and review what happened in the capital markets in 2023 and offer our outlook for the coming year.

This month’s Buy recommendation, Mohawk Industries (MHK), is a major global flooring manufacturer whose shares are deeply out of favor. We discuss three key questions when considering an investment in a cyclical company and describe how Mohawk passes all three with flying colors.

Our cannabis trades continue to perform very well, beating the market by more than tenfold since the last update, depending on the index position considered.

The AdvisorShares Pure U.S. Cannabis (MSOS), is up 10.5%, and the AdvisorShares MSOS 2X Daily (MSOX) is up 18.7% since I last suggested getting long cannabis on December 13. I suggested both as proxies for the sector, at the time.

Wishing you all the best from the past holiday season and as we embark on the final trading week of the year. May the new year bring renewed energy and success in all your endeavors. Here’s to a bright and prosperous 2024!

Not much has changed since last week. So, as we enter one of the slowest trading weeks of the year, we currently have one open position, a SPY bear call spread due to expire in the January 19, 2024, expiration cycle.

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!

Well, December has been a drag.

No Santa Claus rally.

And my New England Patriots look awful.

With the Patriots’ comically bad loss to the Raiders on Sunday night, they aren’t mathematically eliminated from the playoffs. But they effectively are.

It’s really the holiday season now. This time of year, investors stop paying attention to the market, like during the last days of the summer. That means, in the absence of game-changing headlines, stocks probably won’t do much of anything until the rubber hits the road after New Year’s.


When sobered up investors take a fresh look at stocks in January what will they see? They’ll see what they saw before they stopped paying attention, a lot of uncertainty.

The financial media, observers and traders are focused almost exclusively on the path of the Fed’s interest rate tightening policy. How much will they raise rates at the next meeting? How about the meeting after that? Then what? What is the terminal rate (the highest rate of the cycle)? When will the Fed start reducing rates?

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

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

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.

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.

Cannabis stocks are getting sold down as if the industry has no future.

This makes no sense, but there is a good explanation. Traders and investors bought the group heavily on expectations that cannabis sector banking reform would be passed in Congress by year’s end. The AdvisorShares Pure U.S. Cannabis (MSOS) exchange-traded fund (ETF) saw five to ten times normal volume on four days in early December, following two months of accumulation.

After good news on inflation, the market awaits the Fed’s rate decision and comments later today. It could lead to a rally or a fizzle.

Inflation for November was less than expected with CPI at 7.1% versus an expected 7.3% and core inflation at 6.0% versus an expected 6.1%. It’s welcome news that inflation is moving lower and has probably peaked, down from 9.1% in June. But it’s still a long way from the 2% Fed target.

There are only 13 trading days left in the calendar year. This means we are entering what is basically a reality distortion field … in which the closer we get to year’s end, the more that calendar-driven technical motivations, rather than valuations and fundamentals, drive share prices. These motivations create artificial selling pressure that can drive already-weak shares down even further.

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

The market’s rally continues to take on water, and while it’s not a wipeout, many of our intermediate-term indicators are back on the fence.

With 18 days left and little to no value left in our bear call spread, I have decided to take all risk off the table, lock in profits and move on to the next opportunity.

oday, we are moving shares of Lamb Weston Holdings (LW) from Buy to Sell.

There has been a growing number of market-moving headlines for uranium in the last few days, prompting us to give the energy metal a closer look.

As part of the Income Wheel approach, we allowed our Pfizer (PFE) puts to expire in-the-money at expiration last week. As a result, we were issued shares at our chosen put strike of 49.

Five of our Profit Booster positions expired on Friday. Two expired for full profits, while in the case of three covered calls, the stock closed below our short strike price.

Today is the expiration of our August covered calls. While last month was nearly perfect in terms of our trades, this month was a bit choppier. Let’s dive in …

Thanks to the huge 17-month downtrend that ended in late June, cannabis stocks are all very good values today. The best ones to buy are the ones that have been trending up since early July. Those are rated buy below.

Today is a sad day, in a way.

Why?

Because I’m parting ways with Dorchester Minerals (DMLP).

As I discussed in our issue last week, with 30 days left in the September 16, 2022, expiration cycle, it just doesn’t make sense to hold on to our JPM puts any longer.

Our BITO 16 calls for the August 19, 2022, expiration cycle are essentially worthless. Same goes for our GDX 28 calls.

Sell ARIS and Half of SPT

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.