While the market slid on Thursday, which put the recent rally in question, the bulls took the opportunity to buy that dip in a big way on Friday. When it was all said and done it was another strong week for the market as the S&P 500 gained 1.3%, the Dow rallied 0.65%, and the Nasdaq added 2.3%.

The markets had a very good week, and so far, we are also seeing momentum in the first couple of trading days this week. These upward moves have taken the Dow Jones Industrial Average to just about where we started at the beginning of 2023.

The market has been highly unpredictable over the last several years. Things are too uncertain to make bets on the current outlook. Timing the market and betting on sector rotation is a riverboat gamble. I’d rather bank on prevailing trends that will transcend short-term market gyrations.

There is a strong prevailing positive trend in the energy industry, particularly American energy.

Clean energy is the future, but not the near future. The world will continue to rely overwhelmingly on fossil fuels for at least the rest of this decade and probably much longer. But the world has underinvested in oil and gas exploration and production over the last decade and a half. Global supplies are straining to meet growing demand. The dynamic will last for some time.

Investors are realizing the value of companies and stocks in a sector that had been neglected for many years until recently. While commodity prices will go up and down based on several circumstances, energy companies should benefit over time going forward.

In this issue, I highlight the largest American oil refiner. The stock has been a stellar performer. And the company will continue to benefit from cheaper American oil and a reduced number of refineries.

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.

Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the November 2023 issue.

We discuss recent earnings from our companies and move shares of Sensata Technologies (ST) from Buy to Hold given the company’s lower overall quality compared to our initial understanding.

We also include some thoughts on the current stock market and how rising interest rates and other factors have led investors to unload shares of most companies and riskier companies in particular.

We’ve been writing for a few weeks that many secondary indicators were near levels normally associated with the market lows, so if something actually went right in the world, the market could respond powerfully—and we’re optimistic that process is now underway as interest rates have fallen off and the market popped beautifully last week. In response we’re bumping up our Market Monitor ... but only to a level 5 at this point, as the intermediate-term trend still isn’t up. Long story short: We’re OK throwing a couple more lines in the water, but we want to see constructive action from here (tame pullbacks, more breakouts, etc.) before turning truly bullish.

This week’s list has charts in a few different places (some coming off the lows, some near new highs, etc.), but a ton of them reacted well to earnings and most should do well if the market follows through on its rally. Our Top Pick is a stock that, after many months of tedious action, appears to be ready to resume its major upmove.

Stocks had their first legitimately good week since July, thanks to declining bond yields, improving earnings and – surprise! – Jerome Powell. Can the market keep the momentum going? I’m betting yes, even if it’s not a straight line. Market bottoms frequently occur in October, and this year will be no exception. Therefore, today I’m adding more growth to the portfolio in the form of a mid-cap name that’s little known to the masses but is essentially the Google search engine for big corporations. It’s a new recommendation from Cabot Early Opportunities Chief Analyst Tyler Laundon.

Enjoy!

We took our first loss since early July and, admittedly, I thought we were in for a nice return. The five-day, snapback rally of 6%+ last week caught everyone off-guard. Yes, we all knew we were in short-term oversold territory, so a push higher was anticipated, but certainly not on the magnitude of 6%+.

At the time of the trade, with 21 days left until expiration, our probability of success on the trade was 86.76%.

Oh boy, if things hold at current levels, or even push back a tad, we are in store for some nice returns across the board. In fact, this could be one of our more profitable periods over the next few weeks.

I intend to add one more position to the mix this week, so be on the lookout for a trade alert or two coming your way early this week.

Sometimes the best trade is the one not placed. While we’ve seen a few slow earnings cycles for trading, we never want to force trades. As always, opportunities will pick up. Until then, I still expect, well hope, that we will have 6 to 7 trades under our belt before the earnings season is behind us in a few weeks. And this week is a slow one, with DIS and WYNN at the top of the list. But the following week, the last “big” week of earnings, brings on big retail as Home Depot (HD), Walmart (WMT), Target (TGT), among several others, report. The potential opportunities are there, it’s just a matter of what the market is giving us at the time and if it’s enough to meet our criteria.

How quickly the market can change directions as one week we are on the verge of a steep decline, and the next week the indexes explode higher. This last week fell into the big winner camp as the S&P 500 gained 5.35%, the Dow rallied 5.07% and the Nasdaq added 6.61%.

How quickly the market can change directions as one week we are on the verge of a steep decline, and the next week the indexes explode higher. This last week fell into the big winner camp as the S&P 500 gained 5.35%, the Dow rallied 5.07% and the Nasdaq added 6.61%.

For our recommended stocks, earnings season started this week with reports from Walgreens Boots Alliance (WBA) and Wells Fargo (WFC). Next week, Nokia (NOK) reports, and the deluge for our companies starts the following week on October 24 with fourteen companies reporting.

The market has been rallying furiously over the past several days on earnings. Is this the Promised Land or more false hope?

It’s just the kickoff of the third-quarter earnings season and the nation’s major banks have reported. These banks are considered bellwethers for the U.S. economy and numbers are better than expected. The results are reviving hope among investors.

This week was a slow one with few updates to CMCI companies.
It’s earnings season for many large-cap companies, but we will have to wait until November or later to get updates from most micro-caps.

Cabot Options Institute Fundamentals is focused exclusively on the Poor Man’s Covered Call strategy, which is a way to collect reliable gains from a relatively simple options strategy, without the substantial up-front cost of a regular covered call strategy.

Cabot Options Institute Earnings Trader shows you how to use options to profit during the most profitable period in the market: earnings season. Most people are unaware, but you can reliably collect a month’s worth of gains in a matter of days… and sometimes hours.

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.

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.

We recently locked in two profitable trades in SPY and XOP. Today, we are going to go back to the well and place another bear call spread in the SPDR S&P 500 ETF (SPY). Implied volatility is still inflated.

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 fourth position in the Income Wheel Portfolio. Our goal is to ramp up to five to ten. As for our open positions, you can read my thoughts in the previous issue, or watch the webinar from last week.

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.

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.