After the tumultuous sell-off in the broad equity market last month, the S&P 500 Index is back to within a few points of its all-time high as of this writing in what has been one of the fastest comebacks in recent memory.

New technology is driving huge demand growth in old technology. The growth of artificial intelligence, electric vehicles, and semiconductor manufacturing will generate huge growth in electricity.

After being stagnant for most of the last two decades, electricity demand is soaring. Most of the increasing electricity demand (from data centers, EVs, and chip manufacturing) is coming from climate-conscious technology companies that will likely try to secure carbon-friendly power sources whenever possible.

Companies that can provide low-carbon electricity generation should be the primary beneficiaries of this increasing electricity demand. Opportunity is being created for certain companies that also tend to be very recession-resistant at a time when the economy is slowing.

But there is one utility that stands above all others in terms of the current opportunity. And it is highlighted in this month’s issue.

Note: Due to the Labor Day market holiday next Monday, you will receive your next Cabot Profit Booster issue on Wednesday, September 4.

Before we dive into this week’s covered call idea, we need to address our four August positions that expired a week ago.

The market’s rebound has been very impressive, though there are a couple of flies in the ointment (we’re not huge fans of defensive sectors rallying strongly) and this week looks like a good test for a couple of reasons: First, there are some key quarterly reports coming out in key technology areas, and trend-wise, many growth-oriented measures are closing in on five-week highs, which could turn the intermediate-term trend up … if all goes well. For now, nothing has officially changed: If we see more breakouts and further upside, it would obviously be bullish, but while some retrenchment from here wouldn’t necessarily be bearish, it would be a sign the market likely needs more time to set up. We’ll leave our Market Monitor at level 6 this week.

This week’s list is a bit more diversified than the past two weeks, and for our Top Pick, we’re going with a name that’s very strong following quarterly results, has triple-digit growth and a great story—if you enter, be sure to keep it small and use a loose stop.

After an unusually eventful start to the month, stocks have settled into their normal pre-Labor Day malaise. It won’t last long. Early September typically brings a round of selling as Wall Street returns from vacation and starts culling laggards from their portfolios. But with a Fed rate cut now definitely coming just a couple weeks later, could this be a more constructive September than normal? We’ll see. In the meantime, let’s try and sidestep the coming volatility by adding an undervalued mega-cap tech stock that’s well outside U.S. borders. It’s a former market darling that’s become unloved in recent years. But new Cabot Turnaround Letter Chief Analyst Clif Droke spots a bargain, and so today we add it on the cheap to our Cabot Stock of the Week portfolio as well.

Details inside.

The many stock market worries of just three weeks ago appear to be a thing of the past as the S&P 500, Dow and Nasdaq all gained just over 1% last week, and all are now within striking distance of all-time highs.

The many stock market worries of just three weeks ago appear to be a thing of the past as the S&P 500, Dow and Nasdaq all gained just over 1% last week, and all are now within striking distance of all-time highs.

The market’s rebound from the August 5 mini-panic has been unusual—in a good way, with a straight-up advance that’s recouped most of its prior decline, given up very little of its gains along the way, and has been led by a gaggle of growth stocks that have powered ahead on earnings. Now, we’re not totally free and clear here, and some short-term wobbles could easily come; by our measures, the intermediate-term trend is sideways and defensive stocks are percolating, so there’s more work to do. All in all, we’re putting a little more money to work tonight but will still be holding just shy of 40% in cash as we see if the market can further confirm a new uptrend.

In the August Issue of Cabot Early Opportunities, we spread things out across both growth and growth & value ideas. We have a number of newly public players in markets ranging from water quality to electronics certification, as well as a couple of AdTech players. Last but not least is a familiar face in the data security market.

As always, there should be something for everybody.

The market isn’t totally out of the woods at this point—the intermediate-term trend of most indexes and growth measures is essentially neutral here, there’s plenty of overhead to chew through. That said, there’s no doubt the rebound has been impressive, with some indexes recouping 60% to 80% of their corrections, and individual stocks are acting much peppier of late. What happens from here will be key: Some backing off would be normal, but if any retreat is tame and individual stocks continue to flex their muscles, it would be a good sign—though obviously a huge drop would be iffy. For now, we continue to slowly rebuild exposure but are remaining flexible. We’ll nudge our Market Monitor up to a level 6 but are taking things on a day-to-day basis.

This week’s list is another that’s loaded up with powerful charts, all of which have recently surged on earnings reports. Our Top Pick has been extremely tedious for the past 16 months but is flashing some overwhelming buying power as the sector improves.

Stocks are rolling again, and the panic that engulfed the market just two weeks ago has vanished, replaced by the longest market winning streak all year. Nearly all our Stock of the Week stocks are up in the past week, several of them by double digits, led by AST SpaceMobile (ASTS) – up more than 80% (!) since we last wrote. So, let’s strike while the iron is hot and add another upstart growth stock to the portfolio in the form of a mid-cap just recommended by Carl Delfeld in his Cabot Explorer advisory.

Details inside.

Change is constant and inevitable, but one thing that hasn’t changed for the past three centuries: America’s love affair with coffee. Coffee is a commodity that has been prized since the 18^th century in America. Many believe it is the fuel that drives America’s economic engine.

So today, we add a fast-growing American coffee company to the Explorer portfolio. It might not be the name you’re expecting...

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 January edition of the Cabot Turnaround Letter, which was published a week ago Wednesday.

WHAT TO DO NOW: Continue to lean bullish, but let’s see how this growth stock selling wave progresses. The top-down evidence remains in fine shape when it comes to the overall market, and most growth stocks have fallen off this week, but done so normally (while a few others may be trying to emerge). Thus, we’re giving names some rope, but we’re not tolerating any intermediate-term breaks. In yesterday’s special bulletin, we sold half of DraftKings (DKNG) and placed Duolingo (DUOL) on Hold, leaving us with 27% in cash. We’ll stand pat tonight, though are watching things closely and will be in touch if we have any more changes in the days ahead.

The new year is starting with big momentum. The S&P 500 had a torrid late-year rally where it soared about 16% between late October and the end of the year. Stocks closed out the year with nine straight up weeks, the longest streak since 2004.

The final numbers are in. And they’re impressive.

After a bear market in 2022, the market indexes came back sharply in 2023. That’s not unusual. Prior to last year, there had been nine years of negative S&P 500 returns since 1980. Seven of those down years were followed by up years, and four of those seven up years posted returns of 20% or higher. The market doesn’t usually stay beaten down for long.

There were no earnings reports or ratings changes this week. Due to the holidays, we will not be publishing a Friday note or podcast next week. The Cabot Turnaround Letter will be published next Wednesday, and our Friday note and podcast will resume on January 5, 2024.

WHAT TO DO NOW: Remain bullish, but don’t be surprised to see some uneasy trading. Yesterday’s market selloff was overdue, but it did nothing to change any intermediate-term evidence with the market or leading stocks. Near term, it’s probably more of a coin flip as to what happens, so we are picking our spots. In the Model Portfolio, we could have some more new buys soon but tonight we’ll hold off. We will, however, switch DraftKings (DKNG) to a Hold rating. Our cash position will remain around 26%.

First off, just a little housekeeping. I’ll be taking time next week to spend with my family, parents, siblings and new niece in Vermont. Much of our production staff will also be taking some time off, so there won’t be a Weekly Update next Thursday. If there is any pressing news I’ll address it via Special Bulletin.

I hope you have a Happy Holiday season!

Let the good times roll!

A good market just got better. A petering rally has been reinvigorated. And the good times may continue to roll through January.

This might be the first time anyone has described singer-songwriter Katy Perry as a sage observer of the stock market. Her song, “Hot and Cold” opens with the lyrics, “You change your mind / like a girl changes clothes.”

This perfectly captures the changes in sentiment in the stock market over the past two months. Going into October, the market was fully locked into the view that elevated inflation would endure, that 10-year Treasury yields were headed above 5% and that there was no hope for small-cap stocks or any group of stocks other than the Magnificent Seven mega-cap tech stocks. Dark days and a hard landing were undoubtedly ahead.

There were no earnings reports or ratings changes this week.

Cabot Options Institute Quant Trader is focused exclusively on creating consistent returns using high-probability options strategies including bear call spreads, bull put spreads, iron condors and more. Whether you have questions about the strategies, or even about setting up your account, or how to make your own trades, Andy will answer all of your questions

We allowed our BITO calls to expire worthless last week. As a result, we locked in a return of 3.4%. Now it’s time to sell more call premium against our BITO shares. We have managed to reap a total return of just over 105% since introducing Income Trader 16 months ago.

With November expiration only 49 days away, and with implied volatility kicking up over the past week, at least a little, I want to sell some premium. So, I’m going to start with another bear call spread in SPY and add some additional positions over the coming week.

WHAT TO DO NOW: The market’s action of late is encouraging for sure, but there’s still more work to do with our Cabot Tides and growth funds. Today we’re going to sell our small remaining position in DoubleVerify (DV) and hold the cash—with an eye toward redeploying the funds in the near future should the market and individual stocks continue to firm up. Our cash level will now be around 45%.

We allowed our calls to expire worthless last week, thereby reaping the entire call premium. As a result, it’s time to start selling more call premium.

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

WHAT TO DO NOW: The market’s action of late is encouraging for sure, but there’s still more work to do with our Cabot Tides and growth funds. Today we’re going to sell our small remaining position in DoubleVerify (DV) and hold the cash—with an eye toward redeploying the funds in the near future should the market and individual stocks continue to firm up. Our cash level will now be around 45%.

As expected, the Federal Reserve elected to hold the Federal Funds Rate (FFR) steady today (at 5.25% to 5.5%) and also increased their projection for the FFR for 2024 from 4.6% (in June) to 5.1%. This is consistent with the “higher for longer” mantra.

We allowed our TXN calls to expire worthless last week to lock in a full profit on our premium sold. Now, with expiration behind us, it’s time to start selling more premium in TXN.

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.