The market has been in something of a takeoff or lockout rally, but near-term, we’re finally seeing some profit taking set in; coming into today, the Nasdaq was 9% above its 50-day line, so some wobbles are to be expected. Even so, we’re not changing our advice any at this point—we like to play the odds, and right now the odds favor (a) near-term trickiness but also (b) that pullbacks should generally lead to higher prices. We’ll leave our Market Monitor at a level 7 and see how it goes.

While growth could be set for a dip, the broadening of the rally is seeing more non-growth names actually show strength. Our Top Pick is one of many cyclical-type stocks that, after a big hiccup in March with the banking worries, has come alive amidst a vacuum of selling pressure. Dips of a couple of points would be tempting.

A week ago, it felt like a bull market in name only. Now, it feels like a full-fledged bull market, with participation coming from places other than just mega caps and artificial intelligence. That’s reflected in our portfolio, where roughly half our stocks are hitting or near 52-week highs. Still, there’s always a chance things could crater, especially with the S&P 500 up 14% year to date and the Nasdaq up 30%. So today we add some needed value, with the bonus benefit of giving us more overseas exposure, in the form of an undervalued U.K. life insurance company courtesy of Cabot Value Investor Chief Analyst Bruce Kaser.

The market continues to rally higher. And while some of the momentum was lost on Friday, the bulls, at least for the moment, continue to control price action.


We are witnessing overbought levels not seen in five to six years – overbought levels that have only been reached less than a handful of times over the past 20 years.

We are one week closer to the kickoff of next earnings season.


On July 14, JPMorgan (JPM) and Wells Fargo (WFC) and several other notable big banks are due to report earnings. Until then, we will patiently wait, and of course peruse the sparse weekly announcements for a potential opportunity or two.

The June 16, 2023 expiration cycle is finally behind us. Now we can focus on selling more premium in KO, GDX and PFE. All three have offered wonderful returns since being introduced to the Income Wheel Portfolio, and my guess is that they will continue to reside there for the foreseeable future.


As it stands, after the June 16, 2023 expiration cycle, our total return is 90.03%, or 7.5% per expiration cycle.

The good times for the bulls continued as the S&P 500 rose for a fifth consecutive week, its longest such streak since November 2021, and it was also the best week for the S&P 500 since March.

The good times for the bulls continued as the S&P 500 rose for a fifth consecutive week, its longest such streak since November 2021, and it was also the best week for the S&P 500 since March.

The market has been following a very bullish script for the past few weeks, doing just about everything it “needed” to do -- our Cabot Tides have turned positive, as has our Two-Second Indicator, while our Aggression Index tells us growth-ier names are in favor. And more important, individual names are now breaking out (not failing) and following through on the upside. Obviously, the market has come a long way in a short time, and we are starting to see a few strong names wobble a bit, so we’re not going whole hog right here, but we are continuing with our plan of steadily putting money to work -- tonight, we’re filling out our position in one current holding and starting a new half-sized position in a new name. That should leave us with around 40% in cash.

Elsewhere in tonight’s issue, we go over all our new stocks and our watch list, write about one strong sector outside of growth and dive into some solid longer-term positive signs for the market as a whole.

Yesterday’s Federal Reserve meeting and Tuesday’s consumer price index data showed inflation and interest rate hikes are pausing but remains well above what markets would like.

Overall inflation is cooling in large part because energy prices have fallen sharply — a huge relief for consumers. But the core gauge, which excludes energy and food prices, shows inflation is still too high.

Nevertheless, investors welcomed the news as it spurred markets and confidence that the market performance might advance beyond big tech and the artificial intelligence (AI) story.

Despite all the current issues, the market is doing gangbusters.

The S&P 500 is up over 12% YTD. And the year isn’t even half over. The index has also rallied more than 20% from the bear market low in October. That’s the definition of a bull market.

But things aren’t as rosy as they seem. This is the thinnest rally I’ve ever seen. Just ten stocks account for the entire YTD rise in the S&P 500 index. The other 490 stocks have collectively gone nowhere.

Today, I’m recommending a biotech that is well capitalized and has an approved drug that is growing 100%.

Key points about the company:

• Over $300MM of cash on its balance sheet
• Key drug to hit $500MM in annual sales in 2023
• Obscure tax law points to an acquisition offer in November or December.

All the details are inside this month’s Issue. Enjoy!

Ahead of a big week for the market, the S&P 500, Dow and Nasdaq all rose marginally last week.

The market has improved from the heavy selling of last week. But I’m not buying this rally just yet.

At the low point of the selling last week, the S&P 500 was down about 19% from the high. That was dangerously close to a bear market, down 20% from the high on a closing basis. A bear market is an important psychological level that would likely prompt further selling if crossed. And we came right up to the cusp.

The past couple of weeks in the market have not been fun.

The only fun thing about the last few weeks has been the weather.



We got into the 80s last week near Boston, and this weekend temperatures are likely to hit 90 degrees!



I even got to play my first round of golf and didn’t play too badly.

The financial press is full of chatter about what to do in the current market downturn. Common themes include timing the bottom (which usually includes the opposing suggestions to not time the markets followed by suggestions on how to do it), buying on the dips (highlighting the appeal vs. the danger that this is a secular bear market), and buying stocks that have been beaten down by 50% or more year-to-date. There are other themes, but these are the ones I see most often.

Despite the broad market downturn, all our portfolios are currently positioned to withstand the gyrations.

The S&P 500 rebounded 2.39% Friday while the Nasdaq jumped 3.82%. That kind of strong action clearly indicates that institutions such as hedge funds or mutual funds are scooping up shares.



The reason doesn’t matter, so it’s best not to try to explain the action away with theories such as short covering or an equity-buying spree in response to a (perhaps) peak in Treasury yields. It can be mentally entertaining to speculate or overthink these possibilities, but ultimately, it’s all about watching the charts.

You’ve often heard me say that gold’s biggest gains are normally made when investors are worried about either the stock market, the economy or the geopolitical outlook. Right now, all three of those outlooks are in serious question. Why, then, has gold failed to respond to the heightened fears?

This week’s Friday Update includes our comments on earnings reports from four companies and more color on our initial review of another company that reported last week. If Hollywood makes a movie about this market cycle, perhaps it will be called “Revenge of the Moat.”

There is no shortage of data pointing to just how bad this market is. With year-to-date (YTD) performance for the S&P 500, Nasdaq and S&P 600 of -17%, -27% and -18%, respectively, this is one of the worst YTD starts in decades.

The market is down again today, though we do see many stocks and some growth funds putting up a fight. As of 1:30 ET, the Dow is down 333 points and the Nasdaq is down 82 points, though growth funds are up in the 1% to 4% range.

It looked grim for a while there. And we’re certainly not out of the woods yet. But hope has stopped the market decline, at least for now.



The broader S&P 500 index closed earlier this week at a YTD low, down over 16% for the year and over 17% from the high. It is dangerously close to the 20% bear market level which would officially end the bull market that started in March of 2020. That would be an important psychological level that would likely prompt more selling.

It’s not a surprise for those following the market lately: it’s a bear market in Greentech. The past week, only 5% of the Greentech universe is trading higher and every subsector – water, wind, solar and nuclear – are bearish too.

The stock market’s enduring slide must be driven by something – the S&P500 rarely (but occasionally) falls 16% in four months for “no reason.” No doubt the long list of issues led by inflation, war in Europe, the end of cheap and easy money, the cut-off of generous stimulus checks and a possible recession feature large.

ENS is the GoDaddy of Defi. In this week’s market update we will highlight this lesser-known investment opportunity.

Suffice to say it’s been a tough week. As we head into a weekend that can’t come quickly enough, the main market indices are down over 2.5% and many, many stocks are 20%, 30% or 40% off their highs (some are better, some are worse).

This medical device company—despite COVID-19 headwinds—is expected to grow by more than 100% annually over the next five years.

Shares of Fiverr (FVRR) continue to slide, despite a beat-and-raise Q3 report and the threat of Omicron, which in theory should be good for some work-from-home (WFH) stocks.

Wolfspeed (WOLF) closed at 104.60 Thursday, below our recommended stop-loss level of 107. We recommend selling today.

This semiconductor company beat analysts’ earnings estimates by $0.13 last quarter.

More bad news on the virus front caused a huge reversal yesterday, with the Dow down 462 points, the Nasdaq off another 284 and growth stocks faring even worse.

Array Technologies (ARRY) triggered our sell-stop with its close at 17.65 Wednesday, and we recommend selling today.

I just wanted to drop a quick note about what we’re seeing in our portfolio; other than that the high-level action is mostly in line with the broad market (i.e., across the board weak).

The broad U.S. equity market experienced another “volatility event” this week, which was blamed on Covid variant worries and concerns that the Fed might begin tapering sooner than expected.

I just wanted to drop a quick note about what we’re seeing in our portfolio; other than that the high-level action is mostly in line with the broad market (i.e., across the board weak).

Coverage of the shares of this tech company were recently initiated at RBC Capital with an ‘Outperform’ rating.

As we enter the final month of the year, market volatility has increased, and with it, investor anxiety. But the main trend of the market remains up, so I remain confident that intelligent investors who follow proven investing disciples can make money—which brings me to an email I received from a reader just today.

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.