The Federal Reserve event came and passed without much volatility last week as stocks were mostly quiet. For the week the S&P 500 fell 0.5%, the Dow lost 0.2%, and the Nasdaq declined by 0.3%

The Federal Reserve event came and passed without much volatility last week as stocks were mostly quiet. For the week the S&P 500 fell 0.5%, the Dow lost 0.2%, and the Nasdaq declined by 0.3%

While the volatility continues, the markets made some upward progress since our last issue, with all the broad indexes rising—although both Growth and Value stocks are still negative, year to date.

Sector-wise, all sectors— except for Energy (-6.02%), Technology (-7.34%) and Consumer Discretionary (-11.17%)—are in the black, led by Utilities (+5.10%), Consumer Staples (+3.66%), and Real Estate (+2.98%).

The Federal Reserve meets this week, but most economists expect no change in interest rates (for now). We’ll see how inflation is faring next week, which should give us some insight as to future Fed action and whether or not we can anticipate any rate relief this summer.

Japan is back as a place to invest some capital for a number of reasons.

Japanese retail investors have cash positions above 50% versus about 15% for Americans.

Japanese corporates have long been criticized for hoarding cash on their balance sheets and low capital expenditures due to cross-shareholdings with sister companies. But over the past 12 months, share buybacks are on track to increase 96% year-over-year, and the reduction in cross-shareholdings has increased by 75% in the last fiscal year.

All this leads us to consider today a second Japanese stock as an Explorer recommendation.

The market continued its strong rebound from its early-April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.

Given where we stood a month ago, you couldn’t have asked for much better action from the market—now it’s a matter of following through: The intermediate-term trend is on the fence, and many individual stocks have been (possibly temporarily) rejected near obvious resistance levels. Thus, if we see further strength this week, turning the trend up for many indexes and allowing some fresh leaders to take off, we’ll look to extend our line—but if the sellers dig in, more patience will be needed. Right now, we’re sticking with our Market Monitor at a level 5, and we’ll adjust if need be in the days ahead.

This week’s list has a lot of strong names, including a few that have recently reacted well to earnings. Our Top Pick is one of the stronger names in one of the strongest growth areas (cybersecurity). We’re OK starting small here.

Stocks are in a much better place than they were a couple weeks ago. That’s what nine consecutive days of gains will do, as earnings season and a cooling of tariff rhetoric have combined to inject some positivity into what was a doom-and-gloom market environment as recently as mid-April. We surely haven’t heard the last about tariffs, and this week’s Fed meeting can always reopen some old wounds. But we can only go with the evidence in front of us, and right now it’s pointing upward. With that in mind, today we add a growth stock recently recommended by Mike Cintolo in his Cabot Top Ten Trader advisory.

Details inside.

The market continued its strong rebound from its early April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.

The market continued its strong rebound from its early April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.

We’re putting our mining helmets back on today and taking a position in a speculative micro-cap gold and copper exploration company that’s just about to get the drills turning.

This type of stock is intended to scratch the speculator’s itch. It’s not suitable for investing money that you need. That said, if things go well – and I think there’s a good chance they will – the returns could be spectacular.

But please, go in with eyes wide open. This is supposed to be fun.

The evidence has improved during the past couple of weeks, with our Two-Second Indicator looking much better and, importantly, a Three Day Thrust signal (one of our Blastoff Indicators) flashing green last week, both of which prompted us to put a little money to work last week. Still, while that’s definitely a feather in the bulls’ cap, the primary evidence remains negative, so we’re continuing to hold plenty of cash while setting our sights on next week: If our Tides turn positive and many potential leaders gap on earnings (there are tons of names reporting next week), we’ll definitely be putting a good chunk of money to work ... but as always, we’ll take it as it comes, which today means going slow but staying flexible should the market’s recent good vibes accelerate.

Few industries were more negatively impacted by Covid than the cruise industry. And few have come roaring back faster in Covid’s wake. And yet, share prices haven’t kept up with the record sales and passenger numbers. So today, we recommend a major cruise-industry stock that has the largest disparity between sales and earnings growth and share price growth. We also have updates on all our existing stocks as investors mercifully put a historically choppy April for the market in the rear-view mirror and flip the calendar to what will hopefully be a far more fruitful May.

Details inside. Enjoy!

WHAT TO DO NOW: Remain bullish. The market has reacted well to the election and took today’s Fed decision in stride; both of our trend-following indicators are bullish and leading growth stocks remain in good shape. Today, we took partial profits in AppLovin (APP) via a special bulletin after it went vertical on earnings. But tonight, we’re putting that and a bit more money back to work via two new positions—starting half-sized stakes in Samsara (IOT) and the ProShares Ultra Russell 2000 Fund (UWM), leaving us with a cash position around 18%.

The cannabis sector is taking a severe body blow because of election outcomes.

The big negative: Florida voters rejected Amendment 3, which would have legalized recreational use. Voters in North Dakota and South Dakota also rejected cannabis legalization.

The election is over. The biggest risk, a disputed outcome, has been avoided. The new President is being viewed by markets as generally good for business and stocks. The market is thrilled today and rallying substantially.

It’s all about the election right now.

The massive political event is sucking all the oxygen away from everything else. It’s worth noting that the Fed will meet and likely cut the Fed Funds rate this week. That will be the focus after the election is resolved, if it’s resolved.

I don’t get into the business of predicting political outcomes. That’s not my horserace. As of now, the markets seem to be leaning toward a Trump victory. That appears to be the more likely bet. But all that stuff favored Hillary even more so in 2016. We’ll see what happens.

In today’s note, we discuss a flurry of key news developments for several of our portfolio positions, including Agnico Eagle Mines (AEM), Atlassian (TEAM), Intel (INTC) and Janus Henderson Group (JHG).


Two strong earnings reactions after Thursday’s market close bode well for two of our recent portfolio additions.

The broad market has been resilient up until today when we see Microsoft (MSFT) leading the Nasdaq lower.

That said, small caps are hanging tough and are almost exactly flat over the last week.

The darn 10-year yield is still up, which signals the market thinks the Fed did not need to cut by 50bps in September. I’m increasingly dubious about a rate cut next Thursday, even though the market is saying there’s a 95% probability of a cut.

We need to begin with some bad news. Super Micro Computer (SMCI) stock tumbled 32% yesterday after its audit firm, Ernst & Young, resigned. The auditor said it had recently learned of information “which has led us to no longer be able to rely on management’s and the audit committee’s representations, and to be unwilling to be associated with the financial statements prepared by management.”

As you read this, I am likely fortifying my house in preparation for the 400-500 Trick-or-Treaters that are sure to descend on our place in Vermont in a few hours. That’s no exaggeration – we live on a crowded street that draws kids from all over town, and even adjoining towns, trying to maximize their Halloween hauls. The 1,000 pieces of candy I buy every year and the countless ghouls, skeletons, smoke-emitting jack-o’-lanterns and giant spiders I’ve accrued the last few years to adorn our lawn are almost like an annual tax.

Living in such a bustling Halloween hotbed is fun, and it’s certainly a blast for our two kids. But it’s a lot of work, and we’re always happy when the calendar flips to November. And in that way, it reminds me a bit of the market every October.

It has been a great market for most of the last two years. But the bull run will be severely tested over the next couple of weeks.

The S&P 500 is within a whisker of the all-time high after rallying 22% YTD and over 60% in the past two years. The recent investor perception is that the Fed has begun a rate-cutting cycle that will last for two years, and the economy is still solid. That view will be put to the test this week.

It has been a great market for most of the last two years. But the bull market chops will be severely tested over the next couple of weeks.

The S&P 500 is within a whisker of the all-time high after rallying 22% YTD and over 60% in the past two years. The recent investor perception is that the Fed has begun a rate-cutting cycle that will last for two years, and the economy is still solid. That view will be put to the test this week.

In today’s note, we discuss a flurry of key news developments for several of our portfolio positions, including Baxter International (BAX), B2Gold (BTG), Intel (INTC), Polaris (PII), Solventum (SOLV), Viatris (VTRS) and Vodaphone (VOD).

We’re adding two new stocks to the portfolio, providing us with exposure to the white-hot silver mining sector as well as the seasonally strong food services industry.

We’ll also discuss some catalysts for the under-the-radar restaurant group, including three very attractive potential turnaround plays.

WHAT TO DO NOW: The market remains in good shape, though we have seen the indexes and many individual titles exhale a bit of late as many short-term uncertainties (earnings season and the election) and headwinds (rising interest rates) weigh. We’re bullish overall, but are being selective on the buy side—tonight, we’re standing pat, holding our 20%-ish cash position and collection of relatively strong performers.

As the market continues to push out expectations for a rate cut (Powell’s comments yesterday make this much more likely), we’re going to lighten up a little more, starting with Liquidity Services (LQDT), which moves to sell today.

Sell Second Half Remitly (RELY)

WHAT TO DO NOW: Continue to play things a bit carefully as the market’s position deteriorates. Our Two-Second Indicator and Cabot Tides are weakening, and leading stocks, which had been churning for weeks, are continuing to give up ground. It’s possible this morphs into some sort of news-driven shakeout (especially given the hourly Middle East headlines), but we’re simply taking it as it comes. We already have 28% cash in the Model Portfolio, but we’re going to pare back further, cutting our loss in our half position in Celsius (CELH) and selling one-third of our position in Pulte (PHM). Our cash position will now be around 36%.

A number of stocks that were doing well have seen momentum fade and/or turn negative lately, and this morning’s slightly hotter-than-expected CPI print and rising chatter about no rate cuts in 2024 isn’t helping.

Today we are going to close our two Bear Call Spreads (QQQ and SPY) in the Quant Trader portfolio. Here are the details:

All-Weather Portfolio Alert (GLD, IEF, VTI, TLT, DBC), Buffett’s Patient Investor Portfolio Alert (AAPL, GOOGL, TXN), Cabot Options Institute Fundamentals – Yale Endowment Portfolio Alert (SPY, EEM, VNQ, TIP, EFA)

Cannabis stocks rallied hard Monday, particularly after the close when we learned that the Florida Supreme Court approved a referendum on legalizing the sale of cannabis for recreational use. Florida already permits medical use, but the change would expand the size of the Florida cannabis market significantly, especially considering Florida’s large tourist industry.

Sell Varonis (VRNS)

Just a quick heads up, I’ll be adding several new positions early next week. We currently have four positions in the portfolio and my immediate goal is to get back up to between six and eight positions using our ladder-based approach for consistent, weekly income.

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.