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.

This market has confounded a lot of people over the past few years. Individual market sectors have been as perplexing as the indexes. Last year, the worst performing market sector by far was technology. This year it is by far the best performing sector. Last year, energy was the best performing sector. In the first half of this year, it was the worst performing.

Other sectors like consumer discretionary stocks that had been among the worst sectors last year are among the best this year. Defensive sectors including health care and utilities that delivered stellar returns last year have been dogs this year. In fact, the utility sector has displaced energy as this year’s worst performing S&P 500 sector.

The last few years have also illustrated a tendency for downtrodden stock sectors to rise from the canvas and become among the market’s best performers. Many utility stocks are currently near multi-year lows. But not because of the operational performance of the companies, which has largely remained solid. It’s mostly because of high interest rates, which may be peaking, and the mood of investors so far this year, which always changes.

Utilities are dirt cheap in an expensive market. They are also stellar relative performers in a slowing economy. But they are likely to rise from the current dark depths even if the economy remains buoyant. In this issue, I highlight one of the best performing utility stocks over the past 10 years that is currently selling near a multi-year low in a changing market.

Buying great stocks cheap is never a bad strategy over time.

I also highlight a fantastic covered call opportunity in a stock that has been on fire over the past couple of months. It’s a great chance to keep the income rolling in.

Is this a bear market rally or a new bull market?

That’s the question investors are grappling with. Is this the end of the crummy market or is this 17% rally off the lows just a head fake? Let’s examine each possibility.

Over the past three years, special purpose acquisition companies, or SPACs, went from an obscure way for sketchy companies to become publicly traded to an extraordinarily trendy way for sketchy companies to become publicly traded.

It’s starting to feel like a bull market. But let’s not bank on it just yet.

Inflation is moderating, and many see an end to the Fed tightening cycle by early next year. The Fed part is probably true. The Central Bank will likely raise the Fed Funds rate to around 3.5% and then stop. Higher than that would probably plunge the country and the world into a deeper recession. I doubt this Fed will have the belly to do that.

As I touched on last week, the market has been on tear!
It’s unclear whether this is a “bear market rally” or the start of a new bull market.

In the last six weeks, metals and mining stocks have been on the comeback trail along with the broad equity market. Short-covering activity has unquestionably served as a major catalyst behind the recent gains in the metals, but now that much of those short positions have been covered, it’s time to ask the question many investors have been dreading, namely: “What—if anything—will fuel the next leg of the recovery?”

This note includes our review of earnings from Berkshire Hathaway (BRK/B), Elanco Animal Health (ELAN), ESAB Corporation (ESAB), TreeHouse Foods (THS), Viatris (VTRS), Vodafone (VOD) and ZimVie (ZIMV).

There were no ratings changes or price target changes this week.

The subject heading of my last Weekly Update was “The Weirdest Recession Ever (Maybe)”. We’re starting to see why. Because it may not be a recession at all.

Also this week, President Biden signed the $280 billion CHIPs and Science Act. American companies such as Intel and Micron Technology have announced substantial investments in chip manufacturing in an effort to lobby for these subsidies but now announce that they are pulling back as demand for chips used in electronics such as laptops and cell phones is weakening.

We have three ‘buys’ and a ‘drop’ from our Watch list this week.

Greentech is looking its most bullish in nine months, as the market are heartened by the Inflation Reduction Act and its $390 million support for U.S. clean energy efforts. The act still has to go be passed by the House of Representatives, but that is probably a rubber stamp after overcoming the high hurdle of the split Senate.

The market had another solid day today, which was enough to flip our Cabot Tides back to a bullish signal.

On March 22, we purchased a conservative position in Sigma Lithium (SGML), a Canadian company that develops, through its subsidiary Sigma Mineracao S.A., hard-rock lithium deposits in the Americas.

The good news today is that the broad market is looking healthier than it has in many months, thanks to a resurgence by growth stocks.
The bad news is that we still can’t say that cannabis stocks are truly in an uptrend yet—but they might be!

Despite the market falling dramatically the past month, the Cabot Profit Booster portfolio had a great March expiration cycle as three trades will close for full profits, while one is at a loss.

Clif Droke, Chief Analyst for Cabot’s SX Gold & Metals Advisor, advised me that he had traded out of our latest recommendation, the iPath Series B Bloomberg Tin Subindex Total Return ETN (JJT).

Joann Stores (JOAN) reported Q4 results after the bell yesterday that beat on the bottom line and missed on the top line. Revenue was down 13% to $735.3 million (missing by $17 million) while adjusted EPS of $1.16 beat by $0.12. Adjusted EBITDA of $88.9 million was below consensus of $94.2 million and adjusted gross margin of 48.9% was in line (up 1.9% from the year-ago quarter).

We are moving shares of Baker Hughes (BKR) to a Sell. The shares have surged above our previously raised 31 price target (originally 23). Using optimistic yet realistic assumptions, we are hard-pressed to justify a BKR share price meaningfully above the current price.

Cactus (WHD) moves to sell today. After a quick trip to north of 60, shares of WHD have been somewhat volatile and downside risks seems to be creeping in as investors weigh the relatively high valuation and potential for slower ramp up of onshore U.S. production even in the face of soaring oil prices.

In my issue two weeks ago, the day before Russia invaded Ukraine, I told you that my favorite three cannabis stocks for buying (not that there was any hurry) were Cresco Labs (CRLBF) for its value and chart; Curaleaf (CURLF) for its size and speed of growth; and Verano (VRNOF) for its speed of growth and chart.



Those are still my favorites. Not much has changed. And while so many of the world’s economic connections have been affected by the actions in Ukraine, the elements of the U.S. cannabis economy, which is heavily domestic, seem fairly immune.

Procept Biorobotics (PRCT) reported official Q4 results this morning (preliminary results came out on January 11). Revenue of $10.1 million (up 216%) was at the high end of the preliminary range, as was full-year revenue (up 347% to $34.5 million).

The market was down earlier today but, after testing the January lows yet again, the major indexes are perking up somewhat, with the Dow up 440 points and the Nasdaq up 230.

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.