From its July high to last Friday’s low, the Nasdaq pulled back almost nearly 9%, which is generally in line with some other “first corrections” in bull moves we’ve seen in the past, and the bounce since then is a good first step. That said, there’s still much more to prove here: At this point, all of the major indexes we track are below their 50-day lines, leadership-type stocks have been hit hard and interest rates remain an issue. Ideally the market begins to get back in gear right quick, but we need to see more than a couple of up days to conclude that. We’ll pull our Market Monitor down to a level 5 while remaining flexible for whatever comes.

This week’s list is a mixed bag, with something for everyone. Our Top Pick is a tech name that’s always had good numbers, and after many starts-and-stops this year, appears as though it’s finally changing character.

Dog days of August, indeed! The market’s late-summer swoon continues, but that doesn’t mean the bull market party is already over; the power simply went out and we’re waiting for the generators to bring it surging back to life. In the meantime, opportunities to buy good companies at discounted prices abound. With that in mind, today we add a former market darling that fell on very hard times in 2021 and 2022 but is having a solid 2023, with even better growth likely to return in 2024 as the Fed is poised to (likely) cut sky-high interest rates next year. It’s a new addition from Cabot Early Opportunities Chief Analyst Tyler Laundon.

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 Lowe’s (LOW). 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 return of volatility helped us to sell an iron condor this past week for a nice, wide range and decent options premium. Our hope is that we can continue to sell more options premium at even higher levels. The October expiration cycle is 60 days away so now is a great time to enter a few additional positions with the intent of getting out of the trade well before the 60 days are up. Remember, as we discussed on our last subscriber-only call, our average hold time per trade is only 20.6 days, even though we enter trades with roughly 30 to 60 days left until expiration. My goal over the next week or two is to ramp up our open positions to at least three open trades, potentially more, but, as always, Mr. Market will dictate how many we trades are able to get off.

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.

It was another rough week for the bulls as the bond market and China worries continue to weigh on the indexes. By week’s end the S&P 500 and Dow had both lost 2.22%, while the Nasdaq declined by 2.6%.

It was another rough week for the bulls as the bond market and China worries continue to weigh on the indexes. By week’s end the S&P 500 and Dow had both lost 2.22%, while the Nasdaq declined by 2.6%.

In the August Issue of Cabot Early Opportunities, we talk about what happened to the summer stock rally and dig into five companies selling everything from coffee to sporting goods to mobile advertising tools.

Enjoy!

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 market’s nascent downturn remains in effect, with the short-term trend of most indexes and sectors pointed down and with growth stocks bringing up the rear (though today was a good first step to reverse that). Even so, the pullback from a top-down perspective continues to look normal, so we’re not hiding in our storm cellar, either—we’re hanging onto our resilient, profitable stocks while nibbling here or there on high-odds opportunities. We’ll leave our Market Monitor at a level 6 today.

One of the more encouraging things of the past three weeks is that we’re not having trouble finding good-potential names with solid charts, and this week’s list is no different. Our Top Pick is a great growth story and now, after a couple of bad years, all of the firm’s metrics are pointed in the right direction.

August has been a slog for investors, as an uneven earnings season has given the sellers the full buckets they needed to throw a bit of cold water on the 2023 bull market. While high-flying growth stocks have certainly taken it on the chin, especially on earnings, the overall market pullback has been fairly modest, and probably healthy in the long run. With prices lower than they were in July, particularly among growth stocks, today we add a big name with a revolutionary product that many people already use regularly – though only about half the country has access to it. That will soon change, which is why Cabot Growth Investor’s Mike Cintolo is high on it.

The market rally in 2023 and recent pullback have left the All-Weather portfolio up a respectable 8.5%, with the Vanguard Total Stock Market ETF (VTI) continuing to do the heavy lifting, up 27.5%.

Nothing has changed from last expiration cycle, both bond funds (TLT and IEF) and the commodity fund (DBC) continue to lag behind, but that is the yin-yang protective nature of the All-Weather portfolio just doing its job. That being said, all of our positions are outperforming their respective ETF benchmarks, once again showing the power of using a poor man’s covered call approach.

The market is having a big day today. July CPI came out and showed moderation in inflation at 8.5% versus 9.1% in the prior month. Core inflation, which excludes volatile food and energy prices, was 5.9%, the same as last month.

The lower CPI number was widely expected as gasoline and other commodity prices have come down significantly amid the recession fears. But it was still lower than the expected 8.7%. Core inflation didn’t go down, but it didn’t rise either, suggesting a possible leveling off.

Investors seem to have abandoned commodity gold and the shares of gold miners like Barrick Gold. The commodity gold price has slipped 11% from its recent peak of $2,043/ounce while Barrick’s shares have tumbled 37% since reaching nearly $26/share earlier this year.

Cryptocurrency markets have had a very good month led by Ethereum-based projects. Our crypto portfolio of Ethereum (ETH), Polygon (MATIC), and Ethereum Name Service (ENS) are all performing very well, and this trend is expected to continue.

This note includes our review of earnings from Adient (ADNT), Conduent (CNDT), Gannett (GCI), Goodyear Tire & Rubber (GT), Ironwood Pharmaceuticals (IRWD), Kaman Corporation (KAMN), Molson Coors (TAP), Organon & Co. (OGN), Vodafone (VOD), Western Digital (WDC) and Western Union (WU). Next week the deluge tapers with six companies reporting.

There were no ratings or price target changes this week.

The major indexes continue to act well in the wake of our Cabot Tides buy signal, which is clearly a good thing. That said, the vast majority of action remains in stocks that are buried on their charts, while those that acted resilient in recent months are mostly just sitting around.

This market is having quite a rally. The S&P 500 just had one of the best months ever in July, up 9.1% for the month, and is currently up more than 12% from the June low. Will the good times last?

Investors are sniffing an end game to the misery of ever-rising inflation and an ultra-hawkish Fed that has been dogging the market all year. The market tends to anticipate six months or so into the future. By then, it sees inflation under control and a Fed that is done hiking rates and maybe even talking about easing again.

This was a quiet week, and so I’m going to use my introduction to share an update on Cogstate (COGZF), which reported preliminary fiscal 2022 results.

What a July! The S&P 500 moved 9.1% higher for the month, making it the best month since the first pandemic recovery month in 2020. It also closed up 12.6% from the low in June.
Is this a bear market rally or the beginning of something beautiful?

Cryptocurrency markets are rebounding significantly, led by our investments in Ethereum (ETH) and ETH-based projects.

Both Polygon (MATIC) and Ethereum Name Service (ENS) are performing very well.

After a stellar performance in 2020 and a so-so 2021, gold has been one of this year’s biggest disappointments. After a promising rally in the first quarter, gold fell 17% from its March peak of $2,050 an ounce to $1,700 just two weeks ago.

But the decline looks like it may have finally ended in a classic “washout” with small investors running away while market-moving commercial players have lately jumped in as buyers—potentially good news from a contrarian perspective.

Today, we are recommending an Indian ETF whose five largest holdings are: Reliance Industries Ltd Shs Dematerialised (RELIANCE.B, 9.07% of assets); Infosys Ltd (INFY.BO, 8.58%); Housing Development Finance Corp Ltd (HDFC.BO, 6.54%); (ICICI Bank Ltd (ICICIBANK. 5.46%); and Tata Consultancy Services Ltd (TCS.BO, 4.58%). We are also taking profits in a previous idea.

This railroad is expected to grow earnings by 17% next year. The company has a current annual dividend yield of 1.93%, paid quarterly.

In the past 30 days, five analysts have boosted their EPS forecasts for this skilled nursing facility owner.

As you are aware from the prior issue and the last update, the Undiscovered Portfolio is tactical in nature, meaning that we’ll be buying and selling funds on a fairly regular basis, as market conditions change.

Our new recommendation is a bus/heavy duty truck transmission company that has a current annual dividend yield of 1.95%, paid quarterly. We are also selling three previous ideas.

This insurance company beat analysts’ earnings estimates by $0.49 last quarter, and six analysts have recently boosted their EPS forecasts for the company.

Inflation, Russia’s invasion of Ukraine, and rising rates are pushing up commodity stocks this this miner.

The top five holdings in this ETF are: Invesco Shrt-Trm Inv Gov&Agcy Instl (AGPXX, 24.11% of net assets); Coffee C Future Sept 21 (KCU21, 7.43%); Corn Sept21 (CU1, 6.82%); Sugar No. 11 Futures Sept21 (SBV1, 6.71%); and Soybean Nov21 (SX1, 6.66%).

Today we are raising our price target on Arcos Dorados (ARCO) from 7.50 to 8.50. The company is recovering from the pandemic and looks well-positioned to expand its franchise and profits while continuing to improve its balance sheet. The shares remain undervalued.

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 asset management company earned $0.58 per share last quarter, handily beating analysts’ estimates of $0.49. The shares have a current annual dividend yield of 7.87%, paid quarterly.

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.