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

The attention of most investors, commentators and analysts has been on the winners, notably the Magnificent Seven, driving this year’s stock market rally. As contrarians, we are fine with letting a few overpriced trendy stocks capture the spotlight. One place that draws our attention is the other end of the spectrum – those with the worst performance. While most of these stocks fully deserve the market’s dour judgment, some have favorable changes underway. We look into four large and mid-cap stocks that fit this description and one that does not. We also discuss a tactic to help improve one’s success in investing in out-of-favor stocks.

Our feature recommendation this month is Advance Auto Parts (AAP), one of the four major auto parts retailers. The shares have fallen sharply out of favor, but a comprehensive and much-needed overhaul is now starting.

We also include our recent Sell recommendations: Toshiba (TOSYY), Holcim AG (HCMLY), First Horizon (FHN) and ESAB Corporation (ESAB), and our suspension of our rating of shares of Kopin Corporation (KOPN).

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.

Last week had a couple of big news items and, not surprisingly, the market was all over the place, with some strong up action, a wild reversal and then some support after the Fed’s talk. All in all, we consider the shows of support modestly encouraging, along with the fact that sentiment has taken a sharp turn lower as the worries of the world come back into focus. But nothing has really changed with the here and now: The intermediate-term trend of the major indexes and most stocks is pointed down, with few names making any progress. That can obviously change, but for now, we’re still patiently waiting for the buyers to retake control. We’ll leave our Market Monitor at a level 5 tonight.


This week’s list is another mixed set of stocks, though we like the fact that we’re seeing a few more positive earnings moves. Our Top Pick is trying to leave behind a multi-month range after its recent earnings surge.

Stocks are finally showing signs of life after a brutal August, and many of our Stock of the Week positions have fared even better than the market of late. Don’t expect much movement this week as investors will likely play out the summer string until they lock in after Labor Day. Will the (modest) recent gains hold in September, notoriously the weakest month on the investment calendar? We’ll start to find out next week. In the meantime, we won’t try and do too much, which is why today we’re adding a solid-if-unspectacular big-cap retailer that has a habit of beating the market. It’s a new addition from Cabot Dividend Investor Chief Analyst Tom Hutchinson.

Last week we sold calls against newly issued shares in PFE, BITO, GDX and KO. Since we are only a few days into each trade, I plan on posting the details of each position, per usual, in next week’s issue. Until then, I intend on adding one more position to the mix this week. Again, my goal is to have 8 to 10 ongoing positions using the income wheel approach with the occasional one-off trade to bring in some extra income from time to time.

The market had many ups and downs last week, and despite a nasty sell-off on Thursday the indexes closed the week mostly higher. The S&P 500 gained 0.8%, the Dow lost 0.45%, and the Nasdaq rose by 2.26%.

The market had many ups and downs last week, and despite a nasty sell-off on Thursday the indexes closed the week mostly higher. The S&P 500 gained 0.8%, the Dow lost 0.45%, and the Nasdaq rose by 2.26%.

The S&P 500 is right where it was roughly two weeks ago.

The lack of movement has been wonderful for our most recent SPY iron condor, our only open position at the moment. With 53 days left until the October 20 expiration cycle ends, my goal this week is to open two new positions, preferably a bull call spread and bull put spread. We’ve mostly been sitting on the sidelines while implied volatility, as seen through the VIX, traded well below 15. But after the fairly short reprieve, August has thankfully brought new life back into volatility. Of course, we would prefer to see the volatility index kick up to at least 17, if not higher, and plant itself there for a while.

Earnings season is nearing an end once again, but that doesn’t mean that there aren’t a few opportunities left on the table.

This week we have a few interesting opportunities, with the most intriguing being Lululemon (LULU). The majority of the other potential trades, while having decent options liquidity, are just too volatile for my liking. Again, even though it has been a slow earnings cycle for trading, it doesn’t mean we should force a trade. Remember, trading is always about quality over quantity.

The market remains in a correction, though we’re fairly encouraged by this week’s bounce in growth titles, which corresponds with some souring sentiment and many big-picture positives. That’s good to see--but there’s been nothing decisive on the upside, so we remain cautious and flexible, holding plenty of cash and patiently waiting for the major uptrend to resume. We do have one new small buy tonight, but that will still leave us with around half the portfolio in cash.

In tonight’s issue, we write about the short- and long-term view of interest rates, and spend a good amount of space highlighting some names that could be ready to run when the market kicks into gear--including a bigger watch list with a couple of new names.

Warren Buffett became the world’s most famous investor in part by investing in companies with strong economic “moats.” Today, we add a well-known company that fits that description. We also say goodbye to two stocks to make room for more reliable opportunities as the market teeters.

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.

ENS domains are now the top traded NFT collection, according to the leading NFT marketplace OpenSea.

ENS (Ethereum Name Service) trading volume is rising at a 43% week-over-week clip despite other NFT projects falling in value.

While metals like lithium and uranium remain buoyant, gold is still in the proverbial doghouse despite having several good reasons to strengthen. This consideration has prompted investors to wonder what exactly it will take to turn the yellow metal around.

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

Some bad news surrounding many chip firms had the market down decently today, though the buyers did support stocks as the day wore on. At the close, the Dow was up 146 points, though the Nasdaq still finished lower by 31 points.

The strong 17% market rally is over. The S&P 500 is down 7.4% in the second half of August. And here comes Labor Day.

Sobered-up investors start paying attention again after Labor Day. And they can be cranky. That’s why September is historically the worst-performing month. Refocused investors probably won’t like what they see this year.

The optimism of the two months after the June low has faded.

In American football, most quarterbacks are right-handed. So, when they drop back to pass, they typically turn their backs to the left side of the line of scrimmage. They are essentially blind to what happens behind them. If the offensive line is weak, the quarterback is vulnerable to a potentially devastating hit, risking not only that particular play but also possession of the ball and possibly serious injury.

We’re not buying or selling any positions with this update. We are, however, going to recommend converting REE warrants to shares under a company tender. More below.

After a very strong summer rally, the S&P 500 has pulled back sharply.
The cause for concern appears to be Jerome Powell’s guidance from his speech last Friday.

The market has turned south again. And things could be worse in September.

Blame the Fed. Blame inflation. Blame recession. Investors can’t look past them anymore. The market had rallied on hopes that inflation peaked, and the Fed will be all done hiking rates by the beginning of next year. But the Fed poured cold water on those hopes.



The end of this Fed hiking cycle is no longer in view after the recent hawkish statements by the Central Bank. The Fed indicated again last week that it is willing to induce a deeper recession to conquer this inflation. Rates may continue to rise well into next year and investors can’t see the light at the end of this tunnel anymore.

Following the fed summit at Jackson Hole, global markets retreated as investors try to understand the pace of interest rate increases.

Interest represents the time value of money. Borrowers rent money and pay interest for its use.

Gold and silver remain laggards in the broad metals market (no surprise there!). Thankfully for investors, however, other industrial metals are starting to strengthen after the setbacks of recent months and are picking up the slack in the precious metals market.

This note includes our review of earnings from Macy’s (M). Next week, Duluth Holdings (DLTH) reports earnings.

We continue to take a patient approach to ramping up our portfolios, given the current market conditions.
Last week was one of the worst weeks we’ve seen in quite some time, so we decided to sit on the sidelines and allow the carnage to unfold without adding any new positions.


That being said, our All-Weather portfolio performed mightily, actually closing out the week slightly positive, and is up since we initiated our positions, which tells us just how the strategy fares in difficult markets.

Despite many ups and downs, and a trade that went south fast (ZIM), the CPB portfolio held up fairly well during the most recent market rout. Not all trades are winners, but big picture, given the carnage, I’m fairly happy with June expirations trades. Let’s dive in:

Our timing was incredibly fortunate for this one as XOP pushed significantly lower almost immediately after our alert was sent.
Now I want to close out our XOP July 15, 2022, 190/195 bear call spread today for $0.04. By closing out the trade today we can lock in roughly 15%.

First, I wanted to thank all of you for the kind words regarding yesterday’s webinar. I hope all of you found it helpful. As I stated in the webinar, if you have any suggestions, comments or questions please do not hesitate to email me at andy@cabotwealth.com. I appreciate all of your feedback as we want to make all of our webinars an engaging monthly event for everyone.

The market is taking it on the chin today (again) as interest rates soar (+6% to 3.35% and a new 2022 high) and inflation/recession fears tick up. I had ZoomInfo (ZI) on high alert last week given its proximity to support near 33.8.

As I stated last Wednesday, going forward I plan to shorten the alerts. If you still have any questions, please check out the prior alerts or, even better, take a look at the strategy guides on your subscriber page.

Today’s inflation data (CPI) wasn’t expected to be great but was even a little worse than anticipated as consumer prices rose 8.6%. That’s up from 8.5% in March and 8.3% in April. One can slice and dice the data a lot of ways but if you want to flag the main issues, they are probably energy and food prices.

I just wanted to give everyone a brief update that I’ve decided to wait until Monday to send out a trade alert for trades in the Vanguard Total Stock Market ETF (VTI) and iShares 20+ Year Treasury Bond ETF (TLT).

In today’s trade alert, like my last one, I want to start out by selling cash-secured puts with the intent of eventually wheeling into the position.
But I also want to place a trade that’s a bit more on the aggressive side as well. Some of you may be interested, others the opposite due to the underlying. But remember, we are trading statistics. The underlying is almost secondary. I’ll explain below.

Last Friday I sent out our first official trade alert in SPDR Gold Trust ETF (GLD).

We went through the trade step by step in hopes that you have a better understanding of the strategy. I plan on doing the same for our trades today, but the remainder of the trades going forward will be significantly shorter, focusing on the trade and the associated statistics.

Patience is a valuable attribute for sailors who are waiting for the wind to change. And patience is a key attribute for long-term investors. Investors who are impatient are the ones who sell at the bottom and then sit on the sidelines as stocks move back up.



So patience is what I continue to counsel for readers with losses in the stocks in our portfolio.

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.