With the calendar flipping to 2025 and the long holiday weeks/weekends behind us, most traders will be back at their desks starting today. Let the fun begin!

Happy New Year to everyone and wishing you all the best investing in 2025.

Let’s keep in mind this year the merit in legendary global investor Sir John Templeton’s sage advice:

“Diversify. In stocks and bonds, as in much else, there is safety in numbers.”

With this in mind, I see four big trends out there that offer us the opportunity to take a contrarian approach to make some money and lower risk.

It’s been a good year for the market and an even better year for the Stock of the Week portfolio, with the average year-to-date gain on open positions of 52%. Let’s hope the good times keep rolling in 2025. While I doubt the S&P 500 and Nasdaq will be able to maintain their torrid pace of the last two years, there are scores of under-loved sectors and stocks out there, and the bull market remains intact, ready to propel them forward in the New Year. Today, we add a little-known growth stock that just got the stamp of approval from Cabot Top Ten Trader Chief Analyst Mike Cintolo.

Details inside. And Happy New Year!

This week and next week’s Monday morning Week in Review will be focused on position updates so that I can spend the last two weekends of the year with my family. Then starting the week of January 6^th, it’s back to full blast for the Cabot Options Trader and Cabot Options Trader Pro service.

This week and next week’s Monday morning Week in Review will be focused on position updates so that I can spend the last two weekends of the year with my family. Then starting the week of January 6^th, it’s back to full blast for the Cabot Options Trader and Cabot Options Trader Pro service.

First off, this being our last issue of the year, all of us at Cabot wish you and yours a very happy, healthy and prosperous New Year. We’ll be back with a regular update next Thursday after the calendar flips.

As for the market, it’s been a fantastic year, with leading growth titles letting loose on the upside, and we’re happy to have made hay while the sun is shining—the year isn’t quite done but it’s looking like our second-best returns of the past 18 years, when I took over. We’re glad to have done right by you.

That said, we always deal with the here and now, so we’re riding into year-end in a cautious stance, as growth stocks have wobbled and our Cabot Tides and Two-Second Indicators are waving yellow flags. We’re definitely flexible, as some of the recent selling may have cleared the decks for another leg up, but given the evidence, we want to see strength first before embarking on another major buying spree. In this issue, we highlight more than a few names we could jump into if things go well, while sharing more details on our remaining stocks and the recent action.

Cannabis stocks are set to close out the year with a punishing 14% decline. Cannabis investors need help from anywhere they can get it.

It looks like it could come from an unusual place in 2025. The future of the cannabis industry is now in the hands of President-elect Donald Trump.

If anyone told me a few years ago this would be the case, I might have asked them what they are smoking.

However, the reality is that during his presidential campaign, Trump endorsed all three of the main reforms that would legitimize the industry and boost cannabis share prices: Rescheduling, bank reform known as SAFER banking, and legalization of recreational use. Trump endorsed the first two outright. He implicitly endorsed legal rec-use because he supported the Florida referendum which would have made this change. At the very least, he has openly endorsed decriminalization.

First and foremost, this is our last issue of 2024—next Tuesday is one of our two weeks off all year—so we want to wish you and yours a very Merry Christmas, Happy Holidays and a healthy and prosperous New Year.

Also, before we dive into this week’s idea I wanted to address our December expiration cycle trades. Both NCLH and KD stocks finished above their strike prices, which means we walked away from those trades with our full profits.

First and foremost, this is our last issue of 2024—next Monday is one of our two weeks off all year—so we want to wish you and yours a very Merry Christmas, Happy Holidays and a healthy and prosperous New Year. We’ll be back at it with a fresh Top Ten issue on January 6.

As for the market, things finished up with a nice rally last Friday, but that doesn’t undo the action of the prior couple of weeks as a whole, which saw many leaders take hits and many major indexes crack their intermediate-term uptrends. To be clear, we remain flexible, and if the buyers pounce on the recent weakness for a few days, we think there will be lots of “resumption” patterns among individual stocks. Still, given the near- and intermediate-term selling we’ve seen, we want to see buyers show up in a meaningful way first before putting a bunch of money back to work. We’ll leave our Market Monitor at a level 5.

This week’s list is once again very growth-y, which we do find encouraging. Our Top Pick showed exceptional power in November and has now rested for three weeks, offering up a solid entry point, though we advise starting small given the environment.

Jerome Powell went full Grinch last week, sparking a brief market selloff after saying the Fed would cut rates at a slower pace than expected in 2025. Prior to that, there were some obvious cracks beneath the market’s surface, so Powell’s downer of a press conference served more to expand the selling than cause it. But the nice rebound in the last two trading days shows the bulls are still mostly in charge, which means it’s a good time to add a mid-cap water stock that Tyler Laundon just introduced to his Cabot Early Opportunities audience.

Details inside. Happy Holidays!

The breadth worries that had so many traders on edge finally reared their ugly head and took a bite out of the market as the indexes took a big hit on Wednesday. By week’s end things had improved a touch, but still the S&P 500 fell 2.45%, the Dow lost 2.54%, and the Nasdaq declined by 2.71% last week.

The breadth worries that had so many traders on edge finally reared their ugly head and took a bite out of the market as the indexes took a big hit on Wednesday. By week’s end things had improved a touch, but still the S&P 500 fell 2.45%, the Dow lost 2.54%, and the Nasdaq declined by 2.71% last week.

The market has shown some renewed strength over the past several days, particularly among interest rate-sensitive stocks. The Fed met last week, and the market dug this month’s vague insinuations.

The rally sputtered in April after sticky inflation soured the falling interest rate narrative. But last week the Fed Chairman indicated that the next Fed Funds rate move would most likely be a cut and not a raise. Although a hike wasn’t expected, investors like hearing the Fed say it. The statement also combines with recent news of weaker economic growth and a slowing job market.

Gannett (GCI) reported after the bell yesterday, beating on revenue but missing earnings expectations by 21%. The company posted an $84M loss on $635M in income but reiterated guidance to 10% growth in its digital division, keeping overall revenue declines to the low to mid-single digits. CEO Michael Reed reiterated the focus on digital transformation, with revenues from that side of the business likely to comprise 50% of Gannett’s income by 2025.

“The whole world is under-followed relative to the Magnificent Seven…Whether you’re looking at a place like Japan… emerging markets… commodity sectors… there’s really a ton of opportunities that people just refuse to look at.”

-Richard Bernstein, CEO and CIO, RBAdvisors

What had been a tug-o-war between the souring interest rate narrative and earnings excitement is showing signs of veering in yet another direction.

The news on both inflation and the economy has been worse. The Fed’s favorite inflation gauge, the Personal Consumption Expenditures Index (PCE), came in higher than expected at 3.7% last week. Inflation continues to creep higher this year. And that’s with interest rates already at the highest level in decades.

The market is in a tug-o-war between the bummer that rates are likely to stay higher for longer and excitement about the earnings season and artificial intelligence.

The launch of this earnings season has so far saved the market from a selloff that began at the beginning of April when the interest rate prognosis soured. Sticky inflation and a Fed that appeared to lose its resolve to cut rates this year spoiled a five-month rally. But earnings are reviving the market.

Xerox (XRX) reported significant year-on-year decreases in both revenue and earnings on Tuesday, showing a net loss of -$113M (versus estimates of +$49.5M) on revenue of $1.5B, down 12.4% from last year’s 1Q. Despite the disappointing results, CEO Steve Bandrowczak remains optimistic about the company’s restructuring strategy, which aims to align Xerox more closely with market demands and improve operational efficiency.

Tesla (TSLA) has had a rough start to the year. Entering Wednesday, TSLA shares were down nearly 42% year to date thanks to a bitter cocktail of sagging revenues, narrowing margins, and increased competition, especially in China. At the start of this week, TSLA shares had dipped to 142, a 52-week low, and were trading at their cheapest valuation on a price-to-earnings basis since last May and on a price-to-book-value basis since 2019.

WHAT TO DO NOW: Remain cautious, though remain flexible. The market’s initial bounce this week was good to see but it didn’t offset the recent weakness, and today’s Meta-inspired selloff didn’t help the cause. All told, our Cabot Tides remain negative, and most growth stocks are still in rough intermediate-term shape—though the long-term picture is still positive. After selling the rest of our Arista (ANET) position last Friday, our cash position is 44%—we’ll sit tight tonight with our remaining names and our cash and see how earnings season continues to play out.

The week was ticking along pretty well until this morning’s first read of GDP (1.6% vs. expectations of 2.2%) came out and shot a small hole in the “at least the economy is doing well” argument that’s helped the market hold up despite persistent inflation data.

Embedded in the GDP report were Q1 core and headline PCE inflation, both of which were a little hotter than expected and up from Q4 of 2023. March PCE data will be out tomorrow and is expected to be the biggest macro news event of the week.

Just when things were getting seriously ugly, the market started having a great week.

Interest rate disappointment is being replaced by earnings anticipation. The new earnings season came in the nick of time. After five straight up months, the S&P was having a terrible April. Last week was the worst week of the year so far and the index has fallen over 5% from the recent high.

Nokia (NOK) missed on revenue but beat on earnings yesterday, reporting EPS of $0.10/share, which exceeded estimates by over 50%. CEO Pekka Lundmark noted that 2024 will probably remain a weak year for the mobile RAN (radio access network) market, but reiterated expectations that it will likely pick up over the final two quarters. Declining demand for 5G equipment in the U.S./Canada, and a significant slowdown in China (also notably affecting AAPL) are the root cause, but economic data has only recently started to inflect.

The market continues to struggle with the rapid jump in interest rates (10-year at 4.63% after hitting 4.7% on Tuesday).

I think we’re still fluctuating somewhere between a code yellow and a code orange situation (was code green a few weeks ago!) so long as that yield doesn’t go over 4.7% and all hell doesn’t break loose in the Middle East.

Verizon is currently trading for 35.90.

WHAT TO DO NOW: Do a little more buying. Today’s action is very broad and bullish, with our Cabot Tides flipping to positive and with more stocks acting well and hitting new highs. Short term, it’s possible (even likely) we see some retrenchment after a straight-up move in some stocks, we’re going to beef up a couple of our positions today and look to put more cash to work soon (possibly in the next couple of days)—we’ll fill out our stake in Nutanix (NTNX) and add a 3% position back to Uber (UBER), which looks very powerful. Our cash position will now be around 57%. Details below.

VTI is currently trading for 222.60.



In the All-Weather portfolio, we currently own the VTI January 17, 2025, 165 call LEAPS contract at $55.05. You must own LEAPS in order to use this strategy.

SPY is currently trading for 448.02.

Our stop loss has been hit, so we need to stay disciplined and exit the trade. We’ve seen back-to-back losses for the first time since early February of this year and, believe me, more losses will come. But, as we all know, by staying disciplined and continuing to stick with our high-probability approach we will be successful over the long haul and that’s what truly matters. Remember, we need to allow the law of large numbers to work in our favor, and taking stop losses, when the time calls, keeps us moving in the right direction.

I will be exiting our Home Depot (HD) trade today. I will discuss the trade in greater detail in our upcoming weekly issue.

Remember, as is always the case, risk management is the key to long-term success when using high-probability option strategies. It’s the only way to truly allow the law of large numbers to work in your favor. Don’t get greedy and enamored by the quick nature of these trades. Stay disciplined!

Our Small Dogs of the Dow portfolio continues to push higher. More specifically, our INTC position is up over 100% since we initiated it back at the beginning of 2023. The underlying stock position is only up 40%, again showing the power of using a poor man’s covered call strategy on individual stocks and ETFs.

Duolingo (DUOL) Moves to Hold

Since we introduced our GDX position back in early June 2022, we’ve managed to bring in 14.97% worth of premium and capital gains by using our simple income wheel approach. Comparatively, the stock is down 11.1% over the same time frame – once again proving the power of taking the patient, disciplined and conservative approach of the income wheel options strategy.

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.