I’m bullish for 2026. But I’m not confident about the next few weeks.

Last week’s much-anticipated earnings report from AI bellwether Nvidia (NVDA) and the overdue September jobs report were expected to provide answers to the recent angst. Both reports were great. Stocks plunged anyway. That’s a bearish sign.

The market is always unpredictable in the near term. But it seems the greater likelihood over the next several weeks is choppy at best, with a good chance of further downside. But things can change between now and the December issue, and new stocks could be highlighted in weekly updates or via trade alert.

In this issue, I highlight a covered call on a stock that has been flying high over the past month. It has enough momentum to make the call premium huge. It’s a good time to secure a high income on a stock that may have peaked in a market that looks dicey over the rest of the year.

Before we dive into this week’s covered call idea, we do need to clean up our CENX position from the November expiration cycle, as the call we sold expired worthless, leaving us with our stock, which we will sell for a net virtual breakeven. Here are the details:

The evidence has continued to worsen on balance, which has us remaining in a cautious stance. That said, we’re also flexible given some longer-term positives and a couple of near-term secondary readings that popped up last week, which have typically occurred near market low points. Given that the indexes aren’t horror shows, we’re still open to the action this month being a shorter-term shakeout —but with so many things having rolled over, the onus is on the market to prove itself on the upside. Right now, we favor staying close to shore; we’ll stick with our Market Monitor at a level 4.

This week’s list has something for everyone, with AI, fresh medical names, recent earnings winners and some turnarounds, too. Our Top Pick is a steadier name that’s strong partly due to the AI wave; the stock just gapped on earnings and delivered a solid outlook that should keep buyers interested. Aim to enter on weakness.

Happy Thanksgiving week, everyone! The market’s much-needed strong start to this holiday-shortened week is certainly something to be thankful for in the midst of what has mostly been a rough November, particularly for growth investors. Maybe today’s run-up will spark a turnaround. In case there are more wild gyrations ahead, however, today we add a low-beta, way-undervalued utility stock that I recommended to my Cabot Value Investor audience earlier this month. We could use a couple more defensive positions as the market has become more risk-off, and this stock certainly qualifies.

Details inside.

It was another rocky week for the market as the tone was set by a rotation out of richly valued tech names, worries over whether the Federal Reserve would stay on hold rather than cut interest rates, and the big story was ongoing concerns about the sustainability of the AI-driven rally. By week’s end the S&P 500 and Dow had lost 2%, while the Nasdaq fell 3.2%.

It was another rocky week for the market as the tone was set by a rotation out of richly valued tech names, worries over whether the Federal Reserve would stay on hold rather than cut interest rates, and the big story was ongoing concerns about the sustainability of the AI-driven rally. By week’s end the S&P 500 and Dow had lost 2%, while the Nasdaq fell 3.2%.

*Note: Your next issue of Cabot Explorer will arrive next Wednesday, November 26 due to the market holiday next Thursday, November 27 in observance of Thanksgiving Day.

Nvidia (NVDA) sales in the October quarter hit a record $57 billion as demand for the company’s advanced Blackwell AI data center chips continued to surge, up 62% from the year-earlier quarter and beating consensus estimates. This should keep AI momentum moving forward.

By coincidence, Saudi Arabia’s Crown Prince Mohammed bin Salman’s (MBS) high level visit to Washington this week led to the Commerce Department approving sales of substantial advanced chips to Saudia Arabia as well as a slew of related deals. My question is whether these deals are investing in Saudi’s economic transformation rather than in American jobs, technology, and growth.

The market continues to be on edge but having lightened up over the last two and a half months we’re in a decent position to add some exposure today.

This month’s issue offers fresh opportunities in the red-hot pharma space, as well as two little-known mid-cap industrial stories, one in radiation protection and the other in the oil and gas market. Wrapping things up is an introduction to what’s arguably the best play on utility-scale solar.

Enjoy!

Before we dive into this week’s idea we need to move on from our Applied Digital (APLD) covered call as the stock has come under intense selling pressure as the AI story has weakened.

It doesn’t take a proprietary market timing system to see that the evidence has been weakening during the past few weeks—and especially during the past two weeks. That said, the major indexes have refused to give it up, with the big-cap indexes holding near their 50-day lines and, frankly, with more than a few high-relative-strength stocks holding in there. Even so, given the selling, we think it’s best to stay close to shore right now: We’ve moved our Market Monitor to a level 4, which isn’t a sign to sell wholesale, but to limit new buying in general while tightening stops and holding a good amount of cash.

This week’s list surprisingly still has a lot of resilient growth names, which we continue to find interesting given the selling that’s been going on. Our Top Pick is a well-sponsored medical firm with solid growth and a powerful recent breakout.

The market has gotten a lot bumpier in November, though the major indexes haven’t given up much ground. That’s because even as the air comes out of the (perhaps overinflated) artificial intelligence balloon of late, investors are instead rotating into the many under-loved names in other sectors. Today, we add a stock in one of those underappreciated sectors. It’s an educational company that Carl Delfeld recommended to his Cabot Explorer audience last month. And the stock is having a solid year.

Details inside.

Despite a frantic week of heavy sector rotation, the indexes managed to hang in there. Essentially, lofty tech valuations in the AI and growth spaces are now in question, and that hot money poured into defensive sectors. In the end, the S&P 500 eked out a +0.08% gain, the Dow rose +0.34%, and the Nasdaq Composite lost -0.45% last week.

The day of reckoning has arrived. The summer is over. It’s after Labor Day. What will sobered-up investors see when they really start paying attention again?

The post-summer investor can be cranky. That’s why September is historically the worst-performing month in the market. 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 potential turbulence.

WHAT TO DO NOW: The market remains in good shape as we roll into the long weekend, and we’re happy to see some growth stocks rebound in recent days, with today being a solid performance. That’s not a signal to cannonball into the pool, but with a huge cash position, we’re doing some buying tonight, buying another 3% position in GE Vernova (GEV) and starting a half-sized stake in MP Materials (MP). We’re close to adding some other names, too, but we’ll start with these moves and go from there. Our cash position will be around 49%.

Small caps shot higher last Friday after Fed Chair Jerome Powell indicated his willingness to consider a September rate cut.

On Friday, the S&P 600 SmallCap Index jumped by 3.8%, blasting through the 1,400 level that has served as intermittent overhead resistance in July and August. The index also broke through the 1,424 level, which the index jumped to following the weak jobs report a couple weeks ago.

It’s been a rough few years for the housing sector.

Ever since the Fed raised interest rates to multi-decade highs in 2022/2023, both housing starts and existing home sales have fallen off a cliff in the U.S. Housing starts peaked at 1.82 million in April 2022; they dipped as low as 1.28 million this May, a 30% dropoff. Existing home sales have fallen even further, from a 6.6-million-unit peak in January 2021 to a 3.9-million-unit nadir this June – a 41% haircut.

The market is solid. It is within a whisker of the high. But this is the last week of August. What will it do when investors start really paying attention again after Labor Day?

There has been some back and forth recently. The indexes pulled back as technology and the AI trade ran out of gas. But then stocks rallied again after the Fed Chairman indicated at the Jackson Hole speech last week that the central bank would finally cut the fed funds rate in September. Wall Street loves rate cuts.

A theme that has emerged in the last couple of weeks is rotation out of this summer’s high-flyers and into some of the market’s biggest laggards of recent months. While this is encouraging from our perspective, especially since it bodes well for some of the turnarounds in our portfolio, it’s also a reason for embracing a measure of caution, as it shows that the broad market still isn’t firing on all cylinders.

Small caps raced to multi-month highs early last week and, despite the weakness in the tech-heavy Nasdaq this week, small caps are holding up relatively well.

The iShares Core S&P Small-Cap ETF (IJR) is trading right around 114, which was the zone of overhead resistance in July that the index punched through last Wednesday.

Historically, small caps – and especially small-cap value stocks – have tended to do well during the beginning of rate-cutting periods. This puts a lot of pressure on Fed Chair Jerome Powell’s speech tomorrow in Jackson Hole.

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” -Sir John Templeton

Tech stocks and a couple of Explorer stocks are having a tough week, but the rest of the market is calm as investors await Federal Reserve Chair Jerome Powell’s speech on Friday at the central bank powwow in Jackson Hole, Wyoming.

The market’s tectonic plates are shifting.

Last week, I wrote that big tech – namely, the top 20 stocks in the S&P 500 by market cap – had led the way as the market emerged from a sharp late-March/early-April downturn and stretched to new all-time highs earlier this month. Now they’re retreating, with growth stocks – as measured by the Investors’ Business Daily 50 (FFTY) – off roughly 8% in the last week, with some big names (CRWV, -55%; PLTR, -22%; APP, -17%; SMCI, -31%, etc.) plummeting much further than that.

Just when the market appeared vulnerable to selling pressure, news from an unexpected source rode to the rescue, lifting stocks.

On Tuesday, the Labor Department announced that inflation rose 2.7% in July from a year earlier, which was the same as the previous month and up from a post-pandemic low of 2.3% in April. “Excluding the volatile food and energy categories, core prices rose 3.1%, up from 2.9% in June,” according to the Associated Press.

The bull market has become top-heavy again.

Since the early-April lows, the top 20 stocks in the S&P 500 by market cap – nearly all of which are in the technology sector, and fueled in some way by the artificial intelligence bonanza – are up an average of 40.6%, versus a net gain of 27.9% for the index itself in that time, according to DataTrek Research co-founder Jessica Rabe.

Soleno Pharma (SLNO) Pops 40% on FDA Approval

Just a quick reminder that, as per last week’s Special Bulletin, the March Issue of Cabot Early Opportunities will be published next Wednesday, March 26. Among the reasons for pushing the Issue back a week is that it will allow time for new portfolio additions to reflect today’s Fed decision to hold rates steady and the updated Summary of Economic projections (SEP), which implies a total of two 25-basis-point cuts this year.

Insiders at two of our Cabot Cannabis Plus Insider Portfolio names just made large purchases of their company’s stocks. Besides cannabis, I have followed insider activity overall for a few decades. These are significant buy signals, in my experience.

This Market. March Issue Moved to the 26^th

WHAT TO DO NOW: The growth stock meltdown continues, with the major indexes and individual names under heavy pressure again today. Already with nearly 80% in cash, we’re not eager to sell wholesale in the Model Portfolio, but we also won’t just hold and hope. Today, we’re going to sell half our position in Flutter (FLUT), which has fallen sharply this week. We’ll hold the rest of our names as well as our 84% cash hoard.

Sell Reddit (RDDT) and Second Half of FTAI Aviation (FTAI)

LandBridge (LB) Reports

Delcath (DCTH) reported before the bell this morning that Q4 revenue was $15.1 million (+2,701%) and adjusted EPS was $0.00. Revenue beat by $1.5 million (almost 11%). Gross margin was 86%.

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.