If you had written a script of what you wanted to see from the market a few weeks back, most of that has come true; simply put, the evidence continues to improve. Now, of course, things aren’t perfect—we’re seeing a bit of rotation out there that could continue to play out, and there are some potential leaders that are getting wobbly; throw in the fact people are feeling more comfortable and we’re not advising anyone to go hog wild. But with the evidence continuing to impress, we’ll bump our Market Monitor up another notch to a level 7.

This week’s list is heavy on medical and infrastructure-type names, with a smattering of other areas, too. Our Top Pick won’t be the fastest horse but should be a straight-on play on what is looking like a building, construction and infrastructure boom.

We’ve entered a new bull market, and boy are those fun words to type!

Sure, the rally has been thin, led by seven or eight mega-cap tech stocks and, more recently, artificial intelligence. And yes, with inflation and another Fed meeting on the docket this week, a huge bucket of cold water could be thrown in the market’s face in the next 48 hours. But as of this moment, stocks are the healthiest they’ve been since 2021, and that means we’re keeping our foot on the growth pedal. So today we’re adding another potential technology leader that’s a very recent recommendation from Mike Cintolo in Cabot Growth Investor.

Nothing new here. I’m going to keep it fairly short this week. We are firmly in the doldrums of earnings season and will be for the next several weeks.

Of course, what might seem like a slow crawl to the next earnings season, it’s only a month away. JPMorgan (JPM) and Wells Fargo (WFC) are just a couple of the notable names that report earnings July 14.

The June 16, 2023 expiration cycle is finally upon us and we have several positions due to expire. However, since we are using an income wheel approach, we will remain mechanical and allow our KO short put, GDX short and PFE 40 covered call to carry through expiration. Unless any drastic price action occurs prior to expiration, I will look to sell more options premium in each of the aforementioned stocks at the onset of next week.

Other than handling a few trades at expiration, nothing has changed: I continue to search for positions to add to the mix. I would love to see a pullback, preferably a close of the numerous price gaps below in the major indices, before placing a trade.

Before we get started, our next Live Analyst Briefing with Q&A is scheduled for June 15, 2023, at 12 p.m. ET, where we will be discussing the options market, giving a detailed look at open positions, strategies used, and will have a follow-up with live questions and answers.

The market sits at a pivotal juncture with volatility sitting at the lowest levels in a few years. The week ahead is littered with market-moving events. But Wednesday is the day that offers up the most intriguing and potentially market-moving event. Wednesday at 2:00 ET we have the Fed’s rate decision, FOMC statement, and economic projections followed by Chairman Jerome Powell speaking at 2:30. I would expect to see price action vacillate widely immediately after the event. I’ll be paying close attention to see how the VIX reacts prior to and after the statement.

With the market rallying as of late, the All-Weather portfolio is now up 6.0%, with the Vanguard Total Stock Market ETF (VTI) and SPDR GLD Shares ETF (GLD) doing the heavy lifting, up 19.3% and 6.5%, respectively.


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.



Only one of our positions has been rolled so far. We still have four June 16, 2023 calls due to expire this week, As a result, expect to see quite a few alerts come through early in the week as we roll our positions and sell more premium going out 30 to 60 days.

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

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

The markets traded sideways through most of April. But since then, the choppiness has returned—along with worries about the uncertainty regarding the debt ceiling, the expiration of the immigration-limiting legislation, and ongoing debate about the possibility of a recession.

Yet, economically speaking, the trends are still healthy. Manufacturing has held up, employment continues to rise, and job openings are still underutilized (as you can tell if you’ve been in a restaurant lately!).

For the first time in weeks, and maybe even months, the market’s advance felt broader as more and more stocks participated in the market rally. That, as well as the VIX getting clobbered, has me encouraged … for now.

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

The U.S. presidential election, “only” seventeen months away, is shaping up to follow a predictable script. Investors should keep their personal views and their investing process separate.

Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the letter is to let me know what you are looking for.

The market finished solidly in the black thanks to a strong end to last week; interestingly, while the intermediate-term trend is still neutral overall, a couple of broad up days from here could kick it into the green. Even better is the action of leading stocks, with more names emerging and, importantly, more names holding their recent upmoves. To be clear, there’s still a lot of proving to do, but overall, we think the evidence has taken another step in the right direction—we’ll move up our Market Monitor to a level 6 and see what comes from here.

This week’s list has a ton of strong names and other good setups that could lift should the market continue to improve. Our Top Pick looks like the leader of the improving cybersecurity group, having lifted out of a long consolidation. Dips should be buyable.

We include comments on earnings from 12 companies, summarize the podcast, include The Catalyst Report and summarize the May edition of the Cabot Turnaround Letter.

The Federal Reserve, America’s central bank, raised its benchmark rate a half percentage point yesterday as assets that investors perceive as safer were among those to rally. While macro issues such as inflation and interest rates are certainly important, in the end it will be company performance relative to expectations that will be decisive.

Even if inflation may be peaking at levels last seen four decades ago, the key question is whether these levels are transitory or sticky and likely to come back to earth slower than many imagine.

To most people it’s May the fourth be with you day, and tomorrow is Cinco De Mayo. But to the market it’s Fed day. And that’s all that matters.
The Fed meets today and is widely expected to raise the Fed Funds rate by 0.50%. That would be the largest single-meeting rate hike in more than twenty years. It’s necessary because the Central Bank is a million miles behind the curve in countering this high and persistent inflation, currently running at more than 8%.

This market distinctly turned ugly again. The S&P 500 and the Nasdaq closed at year-to-date lows on Friday.

It was hoped that earnings could save the floundering market. But it isn’t happening. Inflation and slowing growth are creating a pall over everything. The Fed seems determined to make up for lost time and aggressively hike interest rates. Stocks can’t get much traction as investors look ahead to more inflation, rising interest rates and a weaker economy.

As I think about the market, I’m struck by how negative sentiment is. The U.S. Sentiment Bull-Bear spread is at -43%. Typically, when it is this negative, forward returns look quite attractive.

Investors always like a safe place to salt away some cash, particularly during a period of market volatility.

Traditionally, that’s been money market funds, or as part of an asset allocation strategy, many have turned to short-term investment-grade bonds.



Those more typical fixed-income funds often play a role as a way to dampen the volatility of equities, and provide some stability during times of high volatility.

Gold prices took a dive in late April, falling 6% after briefly reclaiming the $2,000 an ounce level earlier in the month. While disappointing, the yellow metal still finished the first four months of this year with a net gain of 6%.

Of technical significance, gold remains above its widely-watched 200-day moving average, which tells us that despite the recent weakness, the bulls still have control over the intermediate-term trend.

Over the weekend, Bill Gurley tweeted his perspective on valuation and global markets. Bill is a General Partner at Benchmark, a venture capital firm in Menlo Park, CA. Benchmark has invested in many defining companies including Uber, Zillow, and Grubhub.
His tweets echo what we have been preaching here at Cabot SX Crypto Advisor since inception.

We included comments on earnings from nearly a dozen recommended companies, news about other recommended stocks, and a delay in the publishing of the May edition of the Cabot Turnaround Letter as the chief analyst is stuck in London.

The market is finally enjoying a rally today, with the major indexes up after a few positive earnings reports. As of 2:45 ET, the Dow was up 644 points and the Nasdaq was rallying 400 points.

It’s hard to put a positive spin on the market’s action over the last week. The bottom line is investor sentiment is the pits and most stocks have been sliding. We owe Microsoft (MSFT) a debt of gratitude for stepping up with a good report and showing that things aren’t actually as bad in tech land as everybody seems to think!

It’s the heart of earnings season. More than a third of all S&P 500 companies report this week. Can the earnings barrage save this market?

The market could sure use some help. It just got hit with more bad news when it was already teetering. The market was see-sawing between generally positive earnings in a still strong economy and the specter of an aggressive Fed seriously slowing the economy over the rest of the year. Then it got hit with news of Covid spreading in China and likely slower growth in that country and globally.

After a so-so bounce yesterday (good for the major indexes, not great for the broad market), a combination of fresh virus fears and hawkish words from the Federal Reserve is sending the market reeling again. As of 12:30 EST, the Dow is off 590 points and the Nasdaq is down 264 points.

This mega restaurant company beat analysts’ earnings by $0.30 last quarter. The shares have a current dividend yield of 2.21%, paid quarterly.

This giant oil company blew right through analysts’ earnings estimates, posting EPS of $2.96, compared to the forecast of $2.21. The shares have a current dividend yield of 4.71%, paid quarterly.

General Motors has made a remarkable transition from bankruptcy in 2009 to a highly-profitable and innovative contender in the rapidly changing global auto industry, driven by CEO Mary Barra.

This is the world’s largest uranium company, and its shares were just upgraded at BofA to ‘Buy.’

On to the market, we’re in a good old-fashioned correction for growth stocks. The action in a lot of individual names is as ugly as we’ve seen in a while, with some stocks looking just downright awful. This is a broad move – very few stocks are being left out of it. I suspect the selling has been exacerbated by this being a holiday week.

Today, MRO stock is up 2% along with its oil stock peers. We are going to take advantage of today’s stock gains to exit this stock position for a small loss, so we can move this capital into a fresher idea next week (reminder: tomorrow is one of our two weeks off per year from publishing Profit Booster).

Despite what the broad market indices say, it’s a gross day for the market, and for software stocks in particular. This had been an interesting group in recent months. We’ve seen several rocket to unbelievable heights, while others have continued to falter. It doesn’t take a lot of imagination to foresee a scenario where there is some mean reversion here (i.e. the strongest ones come down, weakest ones pop back up).

The major indexes are doing well today thanks to some mega-cap names, but under the surface, we’re seeing a ton of damage among leading growth stocks. As of 11:15 am ET, the Dow is up 240 points and the Nasdaq is up 91 points, but most growth-oriented funds are down and many names are off big.

Our first pick is a semiconductor company that just closed its acquisition of software company Oculii. The company will report earnings on November 11; current estimates are EPS of $0.49 on revenues of $90.35 million. Our second recommendation is some profit-taking on a previous idea.

It’s time for a seasonal copper trade, and this ETF is a good entry point for the metal.

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.