The bond market’s wild gyrations were once again front of mind for traders last week, though interestingly by week’s end the market was mostly mixed as the S&P 500 lost 0.75%, the Dow fell 1.34%, and the Nasdaq was virtually unchanged.

The Senate banking committee is likely to approve key cannabis sector banking reform today.


Approval would be a significant catalyst for the group. So, it may spark a tradable rally.


Short-term traders may want to sell the strength in this volatile group. Another option would be to de-lever cannabis exposure by selling a portion of AdvisorShares MSOS 2x Daily ETF (MSOX) holdings and swapping the funds into the unlevered version, AdvisorShares Pure U.S. Cannabis ETF (MSOS). That maintains exposure to the group in front of expected catalysts ahead but dampens some portfolio volatility.

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).

The stock market is inherently unpredictable in the near term. That’s what makes it a market. But it has been especially hard to predict in recent years. And there might be more of the same going forward.

There could be continued economic growth with rising interest rates and inflation or an economy bounding toward recession in the next couple of quarters, or anything in between. Sure, the market could find the means to rally with a desirable in between scenario. But it is more likely that the market will just bounce around or move lower.

Amid such uncertainty, it makes sense to find stocks that can weather any scenario. Instead of placing a bet on what the Fed or inflation or the economy might or might not do, it makes sense to seek out an all-weather income generator.

In this issue, I highlight the stock of a company that operates in an incredible niche market that has provided earnings growth for 31 consecutive years and enabled the stock to consistently outperform the market in every kind of environment. The company is positioned for strong growth in the years ahead and is selling below its average valuations over the last five years despite the high-priced market.

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 Fed’s latest hawkish stance prompted an upside breakout in Treasury rates and a big late-week selloff in the stock market, with just about everything getting whacked. That action puts to bed the rally attempt from late August, of course, and reinforces our overall stance—the intermediate-term trend remains down, and with the broadening of selling pressure, we’re pulling our Market Monitor down to a level 5. To be fair, though, we’re not sticking our head in the sand: Yes, there are many worries, but the longer-term trend is still up and there’s plenty of evidence suggesting a resumption of the post-bear rally is coming at some point. Even so, it’s best to wait to see the bulls arrive first than to catch falling knives—right now, we advise holding plenty of cash.

While there aren’t many super-strong stocks out there, this week’s list has many that have taken the selling in stride thus far. Our Top Pick is helping to lead a group move that got underway a few weeks ago and could be starting its first pullback—further weakness would be tempting.

So much for the market being boring! The Fed – with its “higher for longer” vow – broke up the recent monotony, albeit not in a good way. The S&P 500 has dipped to its lowest level since June, and growth stocks have had a rough go these last two months. But all signs point to a fourth-quarter bounce-back – new bull markets almost never up and fizzle within a matter of months. Knowing this, today we add a beaten-down biotech stock with plenty of upside, a recent recommendation from Cabot Early Opportunities Chief Analyst Tyler Laundon.

Details inside.

Volatility has, once again, made an appearance. However, as we have all seen over the past few months, sightings have been rare and, more annoyingly, fleeting. If volatility and in turn IV ranks are able to stay at current levels or potentially rise a little, we should begin to see opportunities pick up. I’ll continue to remain cautiously optimistic and patient until then.

All is well as we head towards the October 20, 2023, expiration cycle. Our BITO position is due to expire at the end of the week, and if all goes well, I intend to buy back our BITO calls, lock in profits and immediately sell more call premium. Otherwise, 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 bring in 5% to 10% worth of call premium over the next 26 days.

Earnings are due to officially begin in just over two weeks with the big banks reporting. Until then, the market gods offer up the liveliest week of the earnings doldrums with several potential opportunities, most notably in COST (COST), Micron (MU) and Nike (NKE). I’ll take a closer look at a potential Costco trade In this week’s Trade Ideas section.

It was a somewhat ugly week for the market as the Federal Reserve continued to push its hawkish agenda and the bond market reacted violently. By week’s end the S&P 500 had lost 2.93%, the Dow had fallen 1.89%, and the Nasdaq had declined by 3.62%.

It was a somewhat ugly week for the market as the Federal Reserve continued to push its hawkish agenda and the bond market reacted violently. By week’s end the S&P 500 had lost 2.93%, the Dow had fallen 1.89%, and the Nasdaq had declined by 3.62%.

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.

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.

The SPDR S&P 500 Oil & Gas ETF (XOP) has pushed into an extreme overbought state. Typically when this type of extreme reading occurs the directional trend stalls or simply pulls back, at least momentarily.

Now, I know I don’t have the ability to consistently “guess” the direction a stock or ETF is headed over really any time frame. But what I can do is consistently wrap a high-probability strategy around an extreme in the market and offer myself an 80%+ probability of success on each trade I place.

We are moving shares of Marathon Oil (MRO) from Buy to Sell.

Today I’m going to start with one trade in the All-Weather portfolio. I’m going to go over it step by step, so we all have a good understanding of how a poor man’s covered call works. Typically, my alerts will not be nearly this long, but I want to make sure we are all on the same page before trades start to pick up.

I want to dip my toes into at least one position this week, with the intent of adding several more next week. My goal is to have a rotation of five to ten positions in both the Income Trades Portfolio and Income Wheel Portfolio.

In today’s trade alert, I want to start out by selling some puts with the intent of eventually wheeling into the position.

After a seven-week hiatus, the bulls finally made an appearance last week…and they roared back with vigor. The S&P 500 (SPY) managed to climb 6.6% last week alone. This week has been a little different as SPY seems to be consolidating after four straight days of rallying.

After dipping below 20% for a few days last month, the S&P is now only down 12.8% for the year. That being said, implied volatility, as seen through the VIX, continues to stay above normal levels.

Welcome everyone!

It’s a pleasure to have you all on board.



I hope all of you had the opportunity to read through the User Guide and the various reports on your subscriber page. If you haven’t, please take the time to read through them at your leisure so you have a decent understanding of our approach and the strategies we use … and more importantly how I approach risk management.

Welcome everyone!

It’s a pleasure to have you all on board.



I hope all of you had the opportunity to read through the User Guide and the various reports on your subscriber page. If you haven’t, please do so at your leisure so you have a decent understanding of our approach and the strategies we use…and more importantly, how I approach risk management.

It’s a pleasure to have you all on board.

I hope all of you had the opportunity to read through the User Guide and the various reports on your subscriber page. If you haven’t, please take the time to read through them at your leisure so you have a decent understanding of our approach and the strategies we use … and more importantly how I approach risk management.

I originally recommended buying BBX Capital (BBXIA) in October 2020 at a price of 3.17, shortly after its spin-off from Bluegreen Vacation Holdings (BVH).

Sociedad Química y Minera de Chile (SQM) is now up 11% from our initial entry point as of Friday, which means it’s time to take some profit off the table per the rules of our trading discipline.

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.