It was another interesting week for the market as the Nasdaq rallied 3.3%, while the S&P 500 added 1% and the Dow fell 0.6%. That is quite the performance difference between the Nasdaq and Dow!

From a top-down perspective, the market remains in good shape, but the real action in the past few weeks has concerned leading stocks, and today many hit air pockets, with plenty of short-term abnormal action (and some intermediate-term abnormal action, too). So where do we stand? One day doesn’t mean the party is over, and frankly, we see some stocks that are approaching decent risk/reward entries, but today is a red flag for some names and is a reminder to manage your portfolio (partial profits, respecting stops) and to aim for decent entries. We’re not panicking, but we’ll lower our Market Monitor to a level 7 and see how things go from here.

This week’s list has a nice mix, with some winners that have been resting for a few weeks alongside some names that have recently shown power. Our Top Pick is a name we’ve kept an eye on for a long time and is now beginning to emerge after a tough mid-year stretch.

At a high level, the market is still humming on all cylinders, with the S&P 500 and Nasdaq hovering near all-time highs. But look closer, and some cracks have egun to form, with the Dow down in the last week and some high-flying growth stocks – including several in the Stock of the Week portfolio – getting sold off today. With inflation data to come later this week, it’s possible a pullback of some kind is in order. So today, we add an inflation-proof stock that Clif Droke just wrote extensively about in his Cabot Turnaround Letter advisory.

Details inside.

It was another interesting week for the market as the Nasdaq rallied 3.3%, while the S&P 500 added 1% and the Dow fell 0.6%. That is quite the performance difference between the Nasdaq and Dow!

It was another interesting week for the market as the Nasdaq rallied 3.3%, while the S&P 500 added 1% and the Dow fell 0.6%. That is quite the performance difference between the Nasdaq and Dow!

The market party is on, but someone forgot to tell healthcare stocks.

They’re the only one of the 11 S&P 500 sectors that is actually down in the month since the presidential election. That has everything to do with these five letters: RFK Jr. But are concerns about Trump’s controversial pick to lead the Health and Human Services Department overblown? It appears Wall Street is starting to think so, as the sector has been in steady recovery after an initial sell-off. Still, as a whole, healthcare stocks have been the weakest performers of any major sector this year. And that spells opportunity for value investors.

In today’s issue, we add a big-name, undervalued healthcare stock to our Buy Low Opportunities portfolio. It’s a company whose name you likely know – and that’s showing signs of more consistent profit growth.

Details inside.

Today’s opportunity skews toward the more speculative end of the spectrum, which is part of why I find it so darn enticing.

If you’re interested in a gold miner that also has an angle to help the U.S. produce a critical element, antimony, currently in short supply outside of China, Russia and Tajikistan, none of which are cozying up to the U.S. right now, this is the stock for you.

While we began a position in this stock via yesterday’s Special Bulletin, all the details are inside this month’s Issue.

This was a good week for Explorer stocks, and as we head into the end of the year, Sea Limited (SE) is so far up 190%, IBM (IBM) is up 48% and Dutch Bros (BROS) was up 62% in November alone.

Tariffs are topic one in Washington and the financial media. Markets don’t know how everything will work out. Mexico is America’s largest trading partner, followed by Canada and then China. America still imports 4 million barrels of crude oil a day from Canada, which is also a key partner on the critical minerals front. More than half of America’s imports of fruits and vegetables come from Mexico. Automakers, which have built factories in Mexico to produce vehicles for the American market, are at risk and their stocks are falling at the wrong time.

But there’s one huge (non-Tesla) exception, which we will add to the Explorer portfolio today.

The market continued to inch its way higher in the two weeks since I last wrote. The Stock of the Week portfolio isn’t inching – it’s soaring. Multiple positions in our portfolio were up double-digit percentages in the last couple weeks, with several others hitting new 52-week or all-time highs. As always, it’s a testament to the elite stock-picking ability of our superb analysts. And today, we add another stock, a familiar name that has regained momentum enough to warrant inclusion in last week’s Cabot Top Ten Trader advisory.

Details inside.

The holiday-shortened week yielded more gains for the leading indexes as traders ready themselves for the close of 2024. Here is how our positions performed last week.

The holiday-shortened week yielded more gains for the leading indexes as traders ready themselves for the close of 2024. Here is how our positions performed last week.

Cannabis stocks are now trading like the group is no longer a viable sector.

I do not believe that is the case. True, companies continue to face pressure from price wars and unbridled issuance of permits for new stores in New Jersey and elsewhere.

But ultimately, the fate of cannabis businesses lies in the hands of politicians.

It was a great first quarter. The S&P closed out March up 10% YTD. The index also rallied an impressive 28% from late October through the first quarter. Is there more upside ahead?

Things have been good. The Fed reiterated its intention to lower the Fed Funds rate three times this year at the March meeting. Meanwhile, inflation is way down and the economy is solid. Manufacturing data was much better than expected and the Fed raised its GDP forecast for 2024 from 1.4% to 2.4%.

The market looks great. The quarter ended last week with the S&P posting the strongest first-quarter start in five years. All three major market indexes have now risen for five straight months.

The Fed said it still intends to cut the Fed Funds rate three times this year at the March meeting. Meanwhile, inflation remains subdued, and the economy is surprisingly strong. Manufacturing data was much better than expected and the Fed raised its GDP forecast for 2024 from 1.4% to 2.4%.

In today’s note, we discuss the recent earnings reports from Walgreens Boots Alliance (WBA). Our note also includes the monthly Catalyst Report and a summary of the April edition of the Cabot Turnaround Letter, which was published on Wednesday.

The story of the week in the markets has been that central bankers are still leaning toward cutting rates by mid-year (odds still favor a cut in June). That’s helped stocks do pretty well, with outsized performance in energy, banks, insurers and homebuilders.

I’ve been monitoring the performance of small-cap sector ETFs versus those of the comparable large-cap offerings. It’s been interesting to see small-cap financials, materials and industrials performing far better.

WHAT TO DO NOW: Remain bullish, but continue taking things on a stock-by-stock basis. We’re seeing another round of sharp selling in many leading growth stocks today, though few (if any) have cracked meaningful support. To us, it’s another shot across the bow, not prompting any major moves but putting us on alert with certain names. In the Model Portfolio, we’re making one small move—selling 20% of our stake in CrowdStrike (CRWD)— while doing a quick flip on Celsius (CELH), placing it on Hold after last week’s half-position buy after today’s drop on news. Our cash position will now be 25%, and we’re keeping our eyes on a few names should the selling continue.

A bullet was dodged, and the bull market forges on.

It looks like the Fed is going to play ball. There was much worry among investors that the Fed would abandon the three-rate-hike goal for this year amid higher-than-expected inflation. But they didn’t. The Fed reiterated its intention for three cuts this year. The odds of a first cut in June increased to 70%.

It is with mixed emotions that I am writing my last Cabot Value Investor issue. My nearly four years as part of the Cabot team have been exceptionally rewarding. I have had the opportunity to work with an exceptional research team – who bring talent, dedication and investment results that readily match and likely exceed most Wall Street sell-side and buy-side analysts. Our Cabot analysts, despite their very different investing styles, have helped me become a better investor.

Earnings season is over, so there were no companies that reported earnings this past week. However, the next earnings season is just around the corner, starting with Walgreens Boots Alliance (WBA) on March 28.

Jerome Powell’s press conference yesterday, which followed the FOMC’s March policy decision (hold) and updated Summary of Economic Projections (SEP), went better than expected.

Many investors were primed for Powell to dial back expectations for three rate cuts later this year. Yet the SEP maintained that stance, which was set in the December SEP. That’s despite a slightly higher PCE inflation rate and GDP forecast than was expected three months ago.

This week the Fed left interests rates again unchanged and Super Micro Computer (SMCI) became part of the S&P 500 index. An announcement of a two million convertible shares offering by Super Micro led to a pullback in the stock though long term, it’s smart to raise capital after the sharp rise in the share price.

Elsewhere, Washington is fixated on the potential push to force a change in the ownership of TikTok while China, as strongly expected, objects. This is a bit ironic since X, Instagram, Facebook, and Google aren’t available to Chinese citizens.

It’s time for all investors to obsess about the Fed again. The Central Bank has its March meeting this week and Wall Street is on pins and needles waiting to hear what they might vaguely insinuate.

It’s another big Fed week in a market that has rallied for more than four months.

The S&P 500 is up 7.28% in the first two and a half months of this year and has rallied over 25% since the low of late October. Stocks have been thriving amid the likely peak in interest rates, expected Fed rate cuts this year, a still-strong economy, and the artificial intelligence (AI) catalyst in the technology sector.

RELY and RCM Report

Well, there is no doubt that our SPY November 17, 2023, position has been a wild ride. We decided to leg into this one by selling the SPY November 17, 2023, 452/457 bear call spread. Several days after the market presented us the opportunity to leg into the other side of our iron condor. We sold the SPY November 17, 2023, 408/403 bull put spread. In total, we were able to bring in $1.32 worth of premium for our SPY November iron condor.

Repligen (RGEN) Beats in Q3

I want to sell a bear call spread in SPY going out to the November 17, 2023, expiration cycle. This is more of a protective play just in case we see a continuation of the current trend over the next week or so. By adding a bear call spread we are able to bring our deltas closer to a neutral state.

We sold a SPY November 17, 2023, bear call spread in late September for $0.74. It’s now worth roughly $0.03. A week later we initiated a SPY November 17, 2023, bull put spread for $0.58, essentially legging-in to an iron condor.

We have a couple positions with calls due to expire today, so let’s get ahead of it and buy back our short calls and immediately sell more calls to collect another round of premium.

I will be exiting the Mastercard (MA) trade today. I will discuss the trade in greater detail in our upcoming weekly issue.

I will be exiting the American Express (AXP) trade today. I will discuss the trade in greater detail in our upcoming weekly issue.

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.