For the first time in a while we started to see big investors floor the accelerator last week, with some names really letting loose on the upside. Moreover, even the “non-AI” nascent leaders that perked up earlier in May are acting fine, with most digesting gains in normal fashion. All of that is to the good—though the top-down flaws that we’ve written about are all still out there, too, with relatively few stocks hitting new highs, a good number of blowups each week and most areas of the market still struggling. Right now, we’re keeping our Market Monitor at a level 5, but we’re watching things closely—if more leaders emerge, it would certainly add to the bullish side of the ledger.

This week’s list has a bunch of solid growth and earnings-related plays from a variety of industries. Our Top Pick is practically a blue chip name from the software field that’s emerging from a solid launching pad.

A debt ceiling deal appears imminent, though that’s ultimately up to our ever-dysfunctional Congress. If it does get done, another Fed interest rate hike may be right behind it. So, the long-awaited rally may be on hold a while longer. But that doesn’t mean individual stocks (see artificial intelligence and semiconductors) can’t get a move-on, so today we add a small-cap MedTech stock that’s showing a lot of promise in addressing a very common – and thus very lucrative – health problem. It’s a new recommendation from Cabot Early Opportunities Chief Analyst Tyler Laundon.

We decided to take off our SPY June 16, 2023 430/435 bear call spread for a nice profit last week which marked 29 out of 33 winning trades since we started Quant Trader exactly one year ago. Moreover, our total return is now hovering around its highest point at 150%.

After locking in 10.8% in Wells Fargo (WFC) at the May 19, 2023, expiration cycle, we decided to sell more puts in WFC during the middle of last week. Since we are early in the trade in WFC, and thus there’s not much to discuss, there will be no comments on the current status of the trade below. Our total return since initiating the Income Trader service just under one year ago stands at 90.8%.

With earnings season behind and few earnings announcements scheduled for the week ahead, the only announcement worth a look this week is Lululemon (LULU). Even so, I wouldn’t be surprised to see no trades this week. This does not mean that we will not have a trade alert or two as we move into the earnings doldrums for the next several weeks.

Despite a couple concerning days to start the week, the bulls took control on Thursday and Friday as tech titan Nvidia’s (NVDA) earnings blowout triggered a “risk-on” bull run.

Despite a couple concerning days to start the week, the bulls took control on Thursday and Friday as tech titan Nvidia’s (NVDA) earnings blowout triggered a “risk-on” bull run.

Before we jump into this week’s covered call idea, I wanted to address our May covered calls, five of which expired for full profits, and others that we need to adjust today.

Stocks have exceeded expectations so far this year. The S&P has rallied 20% from the October bottom and is up over 9% YTD. But there is a plethora of issues in the way of a further rally.

Even if we get past this debt ceiling issue without consequence, there’s inflation and the Fed. There’s also an increasing possibility of a recession later this year or early next year. The market rarely performs well ahead of a recession. A bear market rally should be about out of gas. And it’s difficult to see how stocks can soar into the next bull market until there is more clarity on these issues.

It still makes sense at this point to only buy the defensive stocks that are below the targeted price as well as sell covered calls for income when a stock gets near the top of the recent range.

In this issue, I highlight a covered call in a solid defensive stock that has recently rallied near the high point of the recent range. It’s a terrific way to get a high level of current income at a time when the market isn’t giving much else.

It’s still a narrow rally at this point, but we are seeing more names begin to pop higher, whether on earnings or some other news, with some shakeouts-and-recoveries, some earnings gaps that see immediate follow-through and more names setting up. (We don’t hate the selloff in defensive stocks, either.) It’s not definitive yet, but we will nudge the Market Monitor up to a level 5 and see how it goes.

Growth names make another good showing this week, with a variety of sectors (outside of retail, which has been rough) represented. Our Top Pick is a big-cap chip name that has stormed back after a spring correction.

Stocks had a good week, but dark debt-ceiling clouds are gathering. The closer we get to the early-June deadline without a deal, the more likely we are to see some selling, at least if 2011 is any guide. To prepare for such a scenario, today we add a bit of safety in the form of a master limited partnership (MLP)-adjacent play on America’s infrastructure boom. It’s a recommendation from Cabot Income Advisor Chief Analyst Tom Hutchinson, and it’s hitting new 2023 highs as I write this.

Details inside.

As we move past the May 19, 2023 expiration cycle, I want to add an iron condor and potentially two new vertical spreads, a bear call spread and a bull put spread, for the July expiration cycle. An iron condor will be the initial priority early this week as we dip below 60 days to expiration for the July 21 expiration cycle. My hope is that by week’s end we will have, at minimum, two new trades for the July expiration cycle, if not three.

As the broad market continues to show weakness, concerns about rising interest rates and inflation are bubbling to the top of many ETF investors’ list of concerns.

In the first quarter of 2022, commodity ETFs saw above-average inflows for the first time in many years.

It’s not often that virtually all metals—precious and base—experience a synchronized boom, but thankfully for investors, this is one of those rare events. Due to the inherent cyclicality of the sector, however, we’re forced to pose the question: How long can the metals defy gravity before the inevitable mean reversion sets in?

This week we review earnings from one of our recommended companies and provide updates on three other recommended companies. We share some thoughts on why what produced the remarkable bull market over the past decade and longer may not lead to investing success over the next 5-8 years.

The world is still a mess with crosscurrents galore. But we will soon have something somewhat concrete to focus our attention on. Yes, I’m talking about first-quarter earnings season.

Note: We’re blasting out this week’s update a day early given the Good Friday holiday. We hope you have a great long weekend.

It’s earnings season.

This should be an interesting one. Earnings have saved and rejuvenated the bull market throughout the pandemic recovery. Can this earnings season save the current floundering market?



Stocks are up today because of optimism from the few companies that have reported so far. The expectations are for just 4.5% earnings growth on average for S&P 500 companies. Of course, earnings almost always exceed expectations. But this will still be the slowest growth since the fourth quarter of 2020 as there are much tougher comparisons to the opened-up economy a year ago.

The past week has seen a reversal of the bullishness in Greentech, with five of the past six trading sessions down days and nearly two-thirds of stocks in our coverage universe lower over the past week too. Interestingly, our benchmark index, the Wilderhill Clean Energy Index, has seen much more bearishness among its 78 components, with 70 of them lower the past week. Comparing the two shows that EVs and batteries, which the Wilderhill holds a lot of, are the very poor performers. The good performers, most of which the Wilderhill doesn’t hold, are nuclear-related stocks, infrastructure companies, and organic food-related stocks.

We briefly discuss our thoughts on valuation and raise our price target on shares of a consumer staples company and introduce a new Buy rating on a retail company.

Prices have been pushed lower across the board for stocks and crypto, as traders look to appropriately price riskier assets in a rising interest rate environment. The VIX has moved higher and is now over 23 as demand for option protection has increased.

Correlation between stocks and crypto assets have been positive, especially in recent months. According to Bloomberg, and Arcane Research, BTC has a correlation to the S&P of .40. For BTC to truly hedge, it would be important to see inverse correlation via a negative coefficient.

This week we review earnings from one of our companies and provide updates on others. Our podcast covers these topics and some thoughts on why waving off rising interest rates because they are “fully discounted” may not be a good idea.

The rise in interest rates and the Russia-Ukraine situation are roiling markets and the Fed will soon begin reducing its $9 trillion holdings of Treasury bonds, putting a dent in liquidity that was propping up markets. This is impacting stocks, especially the tech-heavy Nasdaq market.
Agricultural and food markets are also volatile since almost one-quarter of the world’s grain comes from Russia and Ukraine. Across Ukraine’s farm belt, silos are stuck with 15 million tons of corn from the autumn harvest – most of which should have been hitting world markets by now. Impacted by supply-chain bottlenecks and surging freight rates, the $120 billion global grains trade is bracing for upheavals and severe shortages, not to mention political instability.

The big market rebound has petered. And ugliness might be resuming.

The waning of war panic and relief about the Fed’s March 0.25% rate hike have given way to new concerns. There may be a new round of economic fallout from the war as Europe proposes additional sanctions on Russia. There are also growing concerns about economic growth going forward because of inflation and a more aggressive Fed.

AppLovin (APP) reported Q3 2021 results that surpassed expectations on the top line and missed on the bottom line. Maravai (MRVI) reported Q3 results yesterday that surpassed expectations.

This closed-end fund’s largest holders are: Parametric Portfolio Associates (11.86% of assets); SIT Investment Associates Inc (5.14%); and Saba Capital Management, L.P.(4.55%)

Kornit Digital (KRNT) reported Q3 results that missed on the top line and matched consensus on the bottom line. Net of the $7.9 million impact from warrants, revenue was up 51% to $86.7 million ($89.2 million expected) while adjusted EPS of $0.27 was in line.

The market is getting walloped today after a huge inflation report led to a horrible bond auction that kicked interest rates higher. As of 2 pm, the Dow is off 163 points, but the Nasdaq is down 200 points and many hot growth titles are pulling in hard.

Upstart (UPST) reported Q3 results yesterday, and the stock is taking it on the chin this morning despite strong results.

After a nine-month-long and very deep correction, during which the Global Cannabis Index fell 54% and many stocks fell farther, there was strong buying in the sector on Friday and Monday, signaling that the correction in the sector is likely over.

The shares of this financial business have recently been upgraded by Seaport Global to ‘Buy.’

This digital media company expanded its geographical reach with the acquisition of 365 Digital, a digital advertising solutions company headquartered in South Africa. The company’s EPS for its latest quarter beat analysts’ estimates by $0.05 and revenues by revenues 0.21%.

Sell Freshpet (FRPT). Freshpet (FRPT) reported yesterday afternoon and the stock has been under pressure today.

This aerospace company beat earnings estimates by $0.20 last quarter. The shares have a current annual dividend yield of 2.24%, paid quarterly.

This afternoon we are moving shares of Signet Jewelers (SIG) from BUY to SELL.

After going through our portfolio this past weekend, I’ve decided to make a couple of quick changes. Part of my thinking with these two sells is that we have a new crop of ideas coming in next week’s issue and we can carve out some spots (and free up capital) for fresh ideas, while taking a little risk off the table while the market is strong.

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.