The market rally in 2023 and recent pullback have left the All-Weather portfolio up a respectable 4.5%, with our poor man’s covered call in the Vanguard Total Stock Market ETF (VTI) continuing to do the heavy lifting, up 21.4%. The S&P 500 is flat over the same time frame.

Our SPDR Gold Shares ETF (GLD) position has been resurgent of late. After being down roughly 20%, our poor man’s covered call position in GLD now sits 7% higher.

Not surprisingly this past week had many ups and downs, as the market responded well to bad news early in the week and then gave up some of those gains on Friday. By week’s end the S&P 500 had gained 0.46%, the Dow had risen by 0.79% and the Nasdaq had fallen marginally.

Not surprisingly this past week had many ups and downs, as the market responded well to bad news early in the week and then gave up some of those gains on Friday. By week’s end the S&P 500 had gained 0.46%, the Dow had risen by 0.79% and the Nasdaq had fallen marginally.

Investors weren’t surprised by the Federal Reserve’s decision to hold rates steady, but they also didn’t react by ramping up their stock purchases—too much uncertainty what with the election rhetoric heating up and the turmoil in Congress, after Kevin McCarthy was unceremoniously ousted as Speaker. And now, we have the war in Israel.

It’s a confusing market, to say the least. Six months from now we could be in an environment of high rates and sticky inflation, or we could be spiraling toward recession, or anything in between. And stock sector performance is highly dependent on which situation unfolds.

Forget trying to predict the near-term market gyrations, or the Fed, or GDP. Instead, let’s focus on the bigger picture and what we do know. For example, know for a fact the population is aging at warp speed. The population is older than it has ever been all over the world. And the trend is accelerating.

We are in the midst of a tectonic shift in the human population that will have a profound effect on the market and economy. Companies that benefit from this megatrend will have a huge advantage. It’s not an accident that pharmaceutical stocks Eli Lilly (LLY) and AbbVie Inc. (ABBV) are the best performing stocks in the portfolio.

In this issue I highlight the stock of a company that serves a vital role in the pharmaceutical supply chain. It operates a near monopoly that grows every year. Performance has been spectacular and there is every reason to believe the good times will continue.

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.

Friday was an encouraging day, not just because the indexes were up—for the first time in a while, we finally saw a few stocks that were holding up well really pop higher. However, does that change what we’re thinking? Not yet—from a top-down perspective, the intermediate-term trend remains for the indexes and the vast majority of individual stocks. The way we’d think about it is that what we’re seeing out there is a good first step, but the market will have to show more to gain enough momentum for a sustained advance. We’ll leave our Market Monitor at a level 5 for now.

This week’s list targets many of the stocks that are perched near (or are already hitting) new high ground. Our Top Pick is leading a possible new group move in cybersecurity stocks—you can start small here, though we prefer to look for pullbacks as selling on strength is still the norm in the market.

The market is holding up surprisingly well despite an onslaught of bad economic and geopolitical headlines of late. Perhaps it’s a sign the bears are running out of ammo. So this week, we add a stock that has clearly attracted the eye of what few buyers are out there right now – to the point where it’s gotten the attention of several Cabot analysts. Chief among them is Mike Cintolo, who recommended this stock to his Cabot Top Ten Trader audience recently.

Details inside.

We were able to sell calls against our BITO shares early last week. Otherwise, as I stated last week, all continues to be well as we head towards the October 20, 2023, expiration cycle. There isn’t much to do other than allow time decay to work its magic as we head closer and closer to the end of the October 20, 2023, expiration cycle. If our positions act accordingly, we have the opportunity to buy back our positions early, lock in profits, and bring in 5% to 10% worth of call premium over the next week or two.

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.

We added a November 17, 2023, bull put spread in SPY last week, which gives us three positions. The addition of our bull put spread essentially forms another iron condor, although I will be managing the bear call spread and bull put spread in SPY separately.

Last week the stock market once again had some wild ups and downs, led mostly by volatile moves in the bond market. And while the start of the week was ugly, the action Friday was impressive – though the situation in the Middle East may throw those good vibes from Friday right out the window. By week’s end the S&P 500 had gained 0.5%, the Dow had fallen 0.3%, and the Nasdaq had risen by 1.6%.

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The market sold off sharply this morning after another hotter-than-expected inflation report—but, interestingly, the major indexes turned up early on, with the Dow closing up a huge 825 points (2.8%) and the Nasdaq rallying 232 points (2.2%), though individual stocks were far more mixed (though all closed miles off their lows).

We’re entering a period where macro factors are going to fade slightly as investors refocus on company specifics. That’s because earnings season kicks off tomorrow with financials.

The latest week of action suggests the market-wide bearishness is affecting Greentech, with only 6% of the U.S. listed stocks in our universe posting gains since our issue hit your inbox last Wednesday. At that time, we said Greentech is in a zone of support. It still is, but today’s early trading is pushing the sector toward testing a lower trendline we see as a crucial support level. We’re now also about a 6% decline from current levels to a test of the 27-month low set in May. Those two levels provide a band of support at 42-40 for PBW and, as our proxy for the Greentech sector, that’s important support we want to see hold.

Things haven’t been pretty in this market, to say the least. The summer rally topped in the middle of August, and it’s been downhill ever since. In September, the selloff became more inclusive and took just about everything down, including previously buoyant defensive stocks.
The main catalyst for the selling was the August inflation numbers that came out in September. Core inflation was far worse than expected, at a time when investors were hopeful that inflation had already peaked and there would be a light at the end of the tunnel. The market, which doesn’t take disappointment well, has since priced away most of that hope.

Stocks, of course, continue to tumble. Investors’ plates are overflowing with fears ranging from inflation to trade/military wars to financial collapse to the upcoming midterm elections in the United States.

• Ethereum Name Service (ENS) is up 7.5% this week while global markets are down
• FTT, the native token of crypto exchange FTX, surged 7% after a report that payment giant Visa (V) has partnered with the exchange to roll out crypto debit cards. “Even though values have come down there’s still steady interest in crypto,” Visa Chief Financial Officer Vasant Prabhu told CNBC
• Deloitte predicts 75% of merchants are currently looking to adopt cryptocurrencies as part of their digital payment strategies

For our recommended stocks, earnings season starts next week, led off by Walgreens Boots Alliance (WBA) on Thursday, October 13 and Wells Fargo (WFC) on Friday, October 14. The following week Mattel (MAT) and Nokia (NOK) report earnings. The earnings deluge for our companies starts the following week on October 24.

For our recommended stocks, earnings season starts next week, led off by Walgreens Boots Alliance (WBA) on Thursday, October 13 and Wells Fargo (WFC) on Friday, October 14. The following week Mattel (MAT) and Nokia (NOK) report earnings. The earnings deluge for our companies starts the following week on October 24.

Stocks struggled back from early losses yesterday after blue chips posted their biggest two-day gains in more than two years.

Explorer stocks had a good week with most up nicely and Infineon (IFFNY) up about 18%.

Perhaps the best indicator of where the U.S. and global economy is going are commodity prices. For example, copper prices are gaining ground though they are still far from highs reached earlier this year.

After an awful September and third quarter, the market roared back earlier this week on bad economic news.

A bad manufacturing and employment report indicative of a declining economy sent Treasury yields lower and stocks higher. The reason is that the sooner the economy rolls over the sooner the Fed will be done hiking and the sooner the market will recover. If we can just get on with a recession, this high inflation and aggressive Fed misery will end, and a new bull market can begin.

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.

I want to close out our SPY July 29, 2022, 405/410 bear call spread today for $0.35. By closing out the trade we can lock in 8.70%.

Today, I’m going to issue my first alert, but it’s going to be a bit of a dress rehearsal. I’m going to follow the trade per usual with an opening and closing alert, but I want to go through the process the first time, step by step, so everyone has an understanding of what to expect going forward.

Our PFE puts closed worthless last Friday. As a result, we were able to lock in a 1.30% return. Certainly not a home run, but definitely the beginning of piling up premium in the market stalwart.

So, in today’s trade alert, I want to sell more puts in PFE with the intent of eventually wheeling into the position.

As I’ve been stating over the past few weeks, gold and energy look like an interesting short-term setup given the extreme oversold levels.

Today, given the extreme oversold readings, I’m going to open a position in the SPDR Gold ETF (GLD), more specifically a bull put spread.

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

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.
This will make our fifth position in the Income Wheel Portfolio. I’m still looking for a few good candidates for a Jade Lizard or two, but I remain cautious given the current market environment. Moreover, I continue to try to and create a good mix of stocks with different levels of implied volatility.

We’ve been sitting on the sidelines for about a week, staying fairly cautious, while the market continues to vacillate wildly.
We currently have one trade open, a SPY bear call spread at the 405/410 call strikes due to expire in 29 days. The trade currently sits with a probability of success over 89%, so we feel good about this one at the moment.

Last week we finished opening our final position in the Yale Endowment Portfolio. As it stands, we now have two portfolios up and running.

Today we are adding the last of the Yale Endowment Portfolio positions. So far, we’ve ramped up both passive portfolios, All-Weather and Yale Endowment, and will be focusing on adding a few positions in the active portfolios (Growth-Value and Patient) next week.

Before we get to the trades today, I want to discuss an important topic, risk management.

Since we started the All-Weather portfolio, roughly three weeks ago, the S&P 500 is down roughly 9%. And last week was one of the worst in market history. Yet, our All-Weather portfolio is up roughly 2%, proving not only the power of the All-Weather approach, but also the poor man’s covered call strategy.

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.