The market rally that materialized over Thanksgiving week is on temporary hold as investors wait to see if the Fed will, in fact, cut interest rates by another 25 basis points as anticipated this week. If it happens, there’s a good chance the risk-on mood will resume, and the major indexes could reach new all-time highs by Christmas. While I’m not big on predicting what’s going to happen with the Fed, the odds heavily (87%) favor investors getting their wish, so let’s play those odds today by adding a speculative mid-cap software stock recently recommended by Mike Cintolo in Cabot Top Ten Trader.

Details inside.

Despite a quiet tone for much of last week, markets ended on a modestly upbeat note as interest rate-cut optimism firmed. Tech and growth names helped push the market higher on hopes the Federal Reserve will ease soon, while small caps and cyclicals got a lift on improving sentiment.

Despite a quiet tone for much of last week, markets ended on a modestly upbeat note as interest rate-cut optimism firmed. Tech and growth names helped push the market higher on hopes the Federal Reserve will ease soon, while small caps and cyclicals got a lift on improving sentiment.

Today we’re jumping into an emerging precision oncology company that is on the cusp of a major Phase 3 data release for a potential best-in-class treatment for rare eye cancers.

The company also has a stacked pipeline of other potential assets and has teamed up with some of the best in the business as it looks to transition from a clinical-stage company to a full-on commercial success.

Suffice it to say, the risks are somewhat higher with a stock like this, given that FDA approval, or denial, will have a major short-term impact on share price performance.

All the details are inside the December Issue of Cabot Small-Cap Confidential.

Stocks spent the holiday-shortened Thanksgiving week getting well and are again knocking on the door of all-time highs after a sharp pullback through most of November. Value stocks never retreated the way growth titles did, though, and are appearing more in favor by the day. That includes consumer staples, which are still undervalued despite recent momentum. In this month’s Cabot Value Investor issue, we add a once-prominent name from that group that trades at less than half its early-2025 highs – and yet the company never stopped growing. In fact, its sales are accelerating, making it a prime buy-low candidate.

Details inside.

In China, the competition in its EV market is particularly brutal with over 100 companies in the game. Some of those automakers are also working on flying cars to take safety and speed to another level. This is where we go today for a new Explorer recommendation.

Details inside.

Nothing like a little holiday cheer to brighten a grumpy market’s spirits! Salvaging what had theretofore been a miserable November, last week’s Thanksgiving-shortened week brought four straight trading days of buying, nudging the indexes right back to within bad-breath distance of their late-October highs. Is it a sign of things to come in December? Perhaps. If so, now is a good time to pounce on a more speculative biotech play that’s been in favor all year. It’s a name recommended by Tyler Laundon in the November issue of his Cabot Early Opportunities newsletter. Today, we add it to the Stock of the Week portfolio.

Details inside.

After a holiday-shortened but very productive week for the market, here’s what’s happening with all our positions.

After a holiday-shortened but very productive week for the market, here’s what’s happening with all our positions.

Since the effective federal hemp-derived THC ban was approved in the latest budget deal, cannabis investors have taken the change as a sign the Trump administration is no longer serious about rescheduling.

This is probably wrong. Cannabis sector CEOs closer to the rescheduling process than most investors think the sector-changing reform is still on track.

The broad market and growth stocks started to have issues in late September and by early November everything went over the falls, cracking the intermediate-term trend of most indexes and stocks. Encouragingly, though, the market has rebounded this week as we march toward the Thanksgiving holiday--it’s good to see, but especially for growth measures, there’s still more proving to do. Of course, with a lot of cash, we’re willing to buy, and if we see strength continue into early next week (past the holiday period) we could start putting money back to work. For now, though, we think it’s best to be patient and see if the market (and, more important) growth stocks can tell us the selling storm is definitively over.

Note: Due to the Thanksgiving holiday, the Cabot Turnaround Letter weekly update won’t be published on Friday. Instead, the next update and the Catalyst Report will be sent out on December 5.

Given the obvious risks of the current macroeconomic environment (inflation, geopolitical volatility, etc.), it’s my contention that sector selectivity has never been more important. That is, when evaluating stocks for potential purchase, it’s imperative that we consider the potential impact the macro climate might have on said investment going forward.

Value stocks have outperformed the market of late, with the Vanguard Value Index Fund (VTV) up 2.9% in the last month vs. a 2.3% return in the S&P 500. Granted, that’s minuscule outperformance, but it’s a sign that investors are starting to look for value with the major indexes at or near all-time highs for the last couple months.

The market is at another new high and looking good. Anticipated Fed rate cuts and a revitalized artificial intelligence trade are driving stocks higher.

It’s Fed Day! And a rate cut is expected. That’s even better than Prince Spaghetti night to Wall Streeters. More than 90% of traders are expecting the first fed funds rate cut in 2025 to be 0.25%. Hopes for a 0.50% cut likely went out the window with the higher-than-expected August CPI number.

Stocks made another new high this week as investors expect a resumption of Fed rate cuts on Wednesday.

The Fed Chairman indicated that the fed funds rate will be cut at the September meeting during his Jackson Hole comments last month. Wall Street traders are pricing in a 90%-plus probability of a 0.25% cut on Wednesday. And consensus expectations are for two more such cuts before the end of this year.

The ultimate “fear gauge” isn’t the CBOE Volatility Index (VIX), as financial market pundits often insist. My contention is that it’s actually gold, which arguably is the most historically reliable barometer of how worried the average investor is over various economic, geopolitical and market-related developments.

WHAT TO DO NOW: The top-down, market-wide evidence remains in good shape, and encouragingly, growth stocks have revved up decently over the past week, though the action remains heavily concentrated in AI infrastructure-type names. There are still lots of crosscurrents and many names are hitting the occasional pothole, though, so picking your stocks and spots remains vital. In the Model Portfolio we’re making one new buy—a half-sized stake in Alnylam Pharmaceuticals (ALNY)—while placing MP Materials (MP) on Hold. We could have some other moves in the next few days (including averaging up on names in the portfolio), but tonight we’ll buy ALNY and go from there. Our cash position will be around 43%.

With jobs numbers (and revisions) looking pretty iffy and inflation numbers looking as expected (CPI, today), if not slightly better (PPI, yesterday), the chances of the Fed cutting rates next Wednesday are essentially a lock.

In fact, the only reason the probability of a 25bps cut is only 89% is because the chance of a 50bps cut is 11%!

The market likes this news very much. And so do small caps.

This is, almost certainly, our last update before the Fed starts slashing interest rates for the first time this year. According to the CME Group’s FedWatch Tool, there is now a 100% chance Jerome Powell and company will cut rates by some amount on September 17; 90% think it will be by 25 basis points, another 10% think it will be by 50 basis points, much like last September.

The waiting game continues. President Donald Trump teased cannabis rescheduling in an August 11 press briefing, suggesting it would happen in a few weeks.

A month has passed, but no joy yet for cannabis investors.

While it would make more sense to reschedule closer to the 2026 mid-term elections for greater political impact, media reports once again recently cited Washington, D.C., insiders who say rescheduling will happen soon.

The market is enduring the post-summer market well, so far. The expected Fed rate cut is pushing stocks higher.

There are few things Wall Street loves more than rate cuts. And there is one almost surely on the way. Traders are assigning better than 90% probability to a cut. But speculation is growing as an increasing number of analysts expect a 0.50% cut, instead of the usual 0.25%.

It has been called “Beijing’s missile fashion week” by news outlets, and it commanded a fair share of this week’s headlines. It’s also a reminder to investors why the defense sector is still in a leadership position from a relative strength standpoint, driven by ongoing military conflicts in Eastern Europe and the Middle East.

Yesterday, Alphabet (GOOG) shares were up 8% after it avoided harsh antitrust penalties keeping its browser and partnership with Apple (APPL). Alibaba (BABA) shares were up 9.9% this week as quarterly cloud growth was up 26% year-over-year and profits exceeded expectations.

Uncertainty and a weak dollar are two reasons gold and silver are doing so well. The pressure on the Federal Reserve, political volatility, and voracious central bank buying from China and other countries are also factors.

The post-Labor Day market is here. And it’s starting off ugly.

The sobered-up, post-summer investor is notoriously cranky. That’s why September is historically the worst month. Combine that fact with a market that is within a whisker of the high with plenty of uncertainty swirling around, and you have a recipe for trouble.

MSFT, FRSH, SFM Earnings Roundup

Enovix (ENVX) reported Q1 results yesterday after the close that met revenue expectations with $5.1 million. Operating expenses rose in the quarter and will continue to do so into Q2 to support the ramp up to mass production and to prepare for higher production capacity at the newly acquired South Korean battery manufacturing plant.

GE Vernova (GEV) and Sportradar (SRAD) Updates

This has been a difficult month with high levels of uncertainty.

The concurrent declines in the U.S. dollar and S&P 500 are part of a trend that has swept markets since the broad and steep tariffs were announced.

Sell Teladoc Health (TDOC)

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

While there have been some crazy moves in the market this week, it’s somewhat encouraging that, as of 12:00 PM ET, the broad market isn’t off that much compared to Friday’s close.

It’s been encouraging to see the market stabilize over the last two days (though yesterday was a crazy session).

We are all trying to digest the substance of “Liberation Day” and better understand what lasting impact it will have on global trade, the market, stocks that we own and those we are considering buying.

We are all trying to digest the substance of “Liberation Day” and better understand what lasting impact it will have. Suffice to say, there are a lot of ways this could go. But one thing is for sure – we’re in uncharted territory.

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.