Not too much to report this week as we simply allow our August positions to erode in value, which as options premium sellers is a good thing. We enter earnings season this week, so I fully expect to add several positions to the portfolio over the coming weeks. We currently have six open position with the intent of getting up between eight and 10.

Okay, we are back at it after the holiday-shortened week.


The plan this week is to add another iron condor to the portfolio and potentially a bull put spread. Both positions, particularly the bull put spread, will help to balance out the deltas of our portfolio. Currently our open positions consist of two bear call spreads and as a result, the overall leaning is to the short side. While I’m not opposed to the slight bearish leaning, I would like to bring it back closer to a neutral state. Of course, if we manage to take off both of our bear call spreads for profits, which I think we all hope that will be the case, our current state of short deltas won’t be an issue.

The earnings doldrums are finally behind us as earnings season officially kicks off this week with several of the big banks due to announce towards the latter part of the week.

On Friday, prior to the opening bell, JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) are due to announce and will be the focus of our attention this week. I’ve discussed below a potential trade in JPM, but it wouldn’t surprise me if Citigroup and Wells Fargo enter the trading fray this week. That being said, we’ve had decent success with JPM since starting Earnings Trader, with 3 out of 3 winning trades for an average one-day return of 5.3%, so I will most likely stick to the script this week.

The market came under some pressure last week as the S&P 500 fell 1.16%, the Dow lost 2% and the Nasdaq declined by 1%. And while the market lost ground, I would note that it was a holiday-shortened week, and option volumes were down dramatically.

The market came under some pressure last week as the S&P 500 fell 1.16%, the Dow lost 2% and the Nasdaq declined by 1%. And while the market lost ground, I would note that it was a holiday-shortened week, and option volumes were down dramatically.

This month we’re digging into a recovering healthcare specialist that is both a self-help and an AI automation story.

After a few missteps in 2022, a significant acquisition and a new management team have the stock on the right track again.

Moreover, high healthcare utilization and a rapid acceleration in the company’s automation capabilities suggest strong revenue and profit margin growth throughout 2023 and into 2024. Enjoy!

I hope everyone had a wonderful Fourth of July! On Wall Street, the celebration continues, as stocks have stretched to new 2023 highs as we enter the second half of the year. Several of our stocks are hitting new 52-week or even all-time highs, as the bull market is no longer just a mega-cap tech or AI stocks phenomenon, with many sectors and subsectors now along for the ride. So today, we add a cyclical stock that has been acting like a growth stock – so much so that it caught the attention of Mike Cintolo, who recommended it to his Cabot Top Ten Trader readers.

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

Almost like an annual rite of passage, major banks reported their Federal Reserve stress test results last week. All major banks passed, in that their capital levels were in excess of the minimum requirements under the Doomsday Scenario conditions outlined in the test assumptions. We’re not the biggest fans of these tests, for reasons outlined in our monthly letter.

Citigroup remains a riskier bank relative to other majors, but also has a higher return-potential share valuation, plus a 4.5% dividend yield to reward patient investors.

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.

Due to the holiday-shortened week I am going to keep it short today.

We added a new stock to the mix last week, the DKNG August 18, 2023, 22.5 puts. Our total now stands at six stocks, but I don’t plan on stopping there. This week I intend to add one more stock/ETF to the mix, but unlike our other positions, this position will be a short-term trade lasting roughly 30 to 60 days.

Due to the holiday-shortened week I am going to keep the report short this week.


I am excited to inform everyone that I will be adding educational videos to the mix, focusing on all assets of the service. So, if you have anything, and I mean anything, that you would like for me to discuss or explain in greater detail please do not hesitate to email me with your requests.

Due to the holiday-shortened week I am going to keep it short today.


Earnings are slim to none this week. However, that all changes next week when the big banks kick off. JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC) as well as several other big banks are due to report in a little over a week. Yes, that’s right, the wait is almost over…earnings season kicks off Friday, July 14 and I fully anticipate making one if not two trades that day.



Until then, we patiently wait.

Not surprisingly with the holiday weekend, last week was a quiet week. And I bet this week will be quiet too.
But we did get some good news!

A rough second quarter came to an end last week. I would call this a “Nickels and Dimes” market; you make a nickel when the market goes up, and before you know it, you have lost dimes since the market goes down so fast. But that doesn’t mean you have to give up on your opportunity to profit.

The ProShares Short Bitcoin ETF (BITI) launched on Tuesday, June 21. This is the first ETF of its kind launched in U.S. markets, catering to investors (and bears) who are looking to hedge their cryptocurrency holdings. As active investors here at Cabot, we believe the launch of this product to be a compelling way for our readers to profit from short-term declines in cryptocurrency markets and offers a new way to hedge our long portfolio.

Weakness persists in most metals—and commodities in general—as investors continue to worry about the heightened risk of another recession. Despite the bad news, however, there are some promising areas of strength which we’ll discuss here.

Before we do, let’s start with the areas we’ve been avoiding. Industrial metals like copper, steel and aluminum just made fresh lows last week, with the former hitting its lowest level since 2020. “Dr. Copper,” the metal with a PhD. in economics, is especially worthy of mention.

This week’s Friday Update includes a summary of the recent Cabot Turnaround Letter and comments on earnings from Walgreens Boots Alliance (WBA). There were no ratings changes. We also summarize the podcast and include The Catalyst Report.

There are a lot of negatives out there these days. The AAII Sentiment Survey shows optimism is in the tank while pessimism is through the roof.

Explorer stocks held their ground this week as we move two positions to a hold. Don’t be too discouraged. S&P 500 stocks struggled in the first half of this year, roughly equal to that of 1970. That year the S&P 500 fell 21% in the first half and then gained 27% in the second half. Let’s hope 2022 follows a similar pattern.

This market has recovered nicely after plunging into bear market territory and beyond the week before last. Unfortunately, the good times probably won’t last.
All year long the market has bounced to some sort of recovery after plunging to new lows. But stocks can’t seem to muster any lasting traction with rising interest rates, high inflation, and a souring economy. Those things are simply too much of a bummer to whistle past.

The market remains in a bearish posture, with a number of technical signals suggesting the move downward isn’t done yet. Greentech is below its 20-day and 40-day moving averages, which are downtrending, meeting our definition of bearish and there remains a well-defined downtrend line in the broad market and Greentech. That said, we’re above the lows of May, which in itself is a sign the market may be working its way toward a turnaround.

The stock market is resuming its downward slump, creating a drag on investor enthusiasm for buying shares. In many ways, this effect is no different from how consumers approach the purchase of any other item – if you are reasonably confident that the truck/house/trinket/whatever you are wanting to buy will be cheaper in a few weeks, you will wait to make your purchase.

The market rallied strongly off the lows last week, moving 6% higher on the week.
Is the bottom in?


I doubt it. The market has behaved this way all year. There has typically been a rally after intense selling and a new low. But stocks have difficulty generating any lasting upside traction in the face of high inflation, an aggressive Fed, and a slowing economy.

There was little news this week, but I wanted to highlight two things that are on my mind.
First, small and micro-cap stocks look incredibly cheap.

Our first idea, a cloud security company, is set to report earnings today. Analysts are expecting EPS of $0.11 on revenues of $241.56 million. Our second recommendation is a short-sale of a company whose shares are on a downward slide.

Cloudflare (NET) reported Q4 results yesterday that surpassed expectations. Revenue was up 54% to $193.6 million while adjusted EPS came in at $0.01. As compared to some other software stocks that have beat expectations, Cloudflare reinvested the surplus cash in growth initiatives, so it didn’t flow to the bottom line.

Sprout Social (SPT) reported a terrific Q4 yesterday and offered above-consensus guidance for 2022. Despite the good results and outlook, we’re going to sell another one-quarter position to take our stake down to one half today. The bottom line is it continues to be a challenging environment for pure growth stocks, and we need to continue to adapt to the times.

This Indiana bank is rated ‘Strong Buy’ by Zacks, based on rising earnings estimates. It also pays a healthy annual dividend yield of 2.31%, paid quarterly.

This electrical equipment company beat analysts’ EPS estimates by $1.02 last quarter.

Today is the expiration of our three February covered calls. The big picture takeaway is that all three will expire for full profits, you don’t need to act on any of these trades, and come Monday we will no longer own a stock or option position in MRO, TECK and ABBV.

This title insurance company beat earnings estimates in its most recent quarter, posting EPS of $2.94, compared to the $2.01 estimate. The shares have a current dividend yield of 2.15%, paid quarterly.

Gold is heating up as the Ukraine-Russia situation heats up, and some of the blue-chip senior and mid-tier gold miners are showing conspicuous signs of relative strength. Since mining stocks tend to outperform gold in a precious metals bull market, it’s time to take a closer look at the leading miners.

Cloudflare (NET) reported Q4 results yesterday that surpassed expectations. Revenue was up 54% to $193.6 million while adjusted EPS came in at $0.01. As compared to some other software stocks that have beat expectations, Cloudflare reinvested the surplus cash in growth initiatives, so it didn’t flow to the bottom line.

This medical device maker is expected to grow earnings by more than 30% next year, and is trading at a severe discount. The shares have a current annual dividend yield of 3.07%, paid annually.

One of the many market aphorisms that float around in my head says, “Never sell a dull market short.” It reminds us that in theory, low volume and calm trading ranges such as we’ve seen in the cannabis sector recently tend to signify a balance of buying and selling pressures, and thus a likelihood, particularly after the previous one-year decline, that the dullness will soon be replaced by a new uptrend.

This industrial machinery company will report earnings on March 2. The company is expected to post EPS of $0.62 on revenues of $768.71 million.

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.