Our Cabot Cannabis Investor portfolio is up 35% this year. That’s more than 10 times the 3% gain for the S&P 500.

The broader cannabis sector has done well too, but not quite as well as our Cabot Cannabis Investor portfolio of the 12 best names in the space.

The New Cannabis Ventures Global Cannabis Stock Index and the ETFMG Alternative Harvest exchange traded fund (MJ) are up 14.5%. We’re up more than twice as much.

Our Cannabis Plus Insider Portfolio is up 39.3% since I launched it on March 29 last year. Here we have outperformed the market by threefold. The 39.3% advance compares to gains of 12.7% for the Russell 2000 index, and 22.3% for the S&P 500 over the same time. The smid-cap Russell 2000 is a more appropriate comp than large-cap names in the S&P 500. This portfolio invests in cannabis related companies that have the right kind of insider buying, and do not touch the plant.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the February 2024 issue.

This issue focuses exclusively on spin-offs and discusses seven attractive and relatively recently spun-off companies.

This month’s Buy recommendation, Baxter International (BAX), a major producer of medical equipment and hospital supplies, is involved in a spin-off. In this case, it is the parent company of an upcoming spin-off. The transaction, along with fundamental improvements and a long-time low share valuation, makes Baxter shares attractive.

Ahead of a potential monster week for the market, with plenty of volatility, last week was fairly quiet for the indexes. The S&P 500 gained 0.7%, and the Dow and Nasdaq were mostly unchanged.

We could pretty much cut and paste last week’s write-up here, as nothing much has changed with the evidence, and thus, with our positioning—the primary evidence remains bullish, with the trends of the indexes pointed up, and the action of leading stocks remains very solid. With that said, the broad market is mostly marking time, while interest rates are testing key intermediate-term levels. Long story short, we’re still bullish and are keeping our Market Monitor at a level 8, but are being more discerning on the buy side.

This week’s list has everything from popular tech names to cyclical tech to development-stage biotech, though as mentioned above, we like that we’re seeing some big-volume moves. Our Top Pick has a history of trending in good times and looks set for a big turnaround.

It’s a potentially very busy week for the market, as we close the book on a productive January. The Fed will come out with its latest interest rate progress report; new jobs numbers will be released; and 40% of the S&P 500 will report earnings. Expect some movement in the market. Entering the week, the market is behaving quite well, sitting at new all-time highs as I write this. It’s a good time to take some risks. And today, we do just that by adding a small-cap biotech that got Wall Street’s attention in September after achieving a breakthrough on a new drug candidate. It’s a brand-new recommendation from Cabot Early Opportunities Chief Analyst Tyler Laundon.

We added a bear call last week and hope to add at least one more trade, if not more, this week. My plan is to balance out the overall deltas of our current positions by adding a trade, most likely a bull put spread. I’ll be focusing on sector ETFs and individual stocks as the major indices continue to see low levels of volatility.

We locked in another profitable trade at expiration last Friday, bringing our positive trades total for the January expiration cycles to six. Our total returns so far in January are 12.36%.

As for this week, I will be potentially selling more premium in PFE, BITO and possibly a new position or two. Stay tuned for the trade alerts!

It continues to be a good start to the year. Let’s keep it simple, stay mechanical and allow the strategy to do the heavy lifting.

After locking in gains in PFE our total returns now sit at all-time highs of 124.9%. We introduced the portfolio in June 2022 and continue to be impressed by the resilient and consistent nature of the income wheel strategy during all market environments.

We made our second straight successful trade for this earnings cycle last week. We were thankful to take quick profits in Visa (V) Friday morning. All went well as V opened well within the chosen range of our iron condor and, as a result, we were able to take off the trade for a nice one-day gain of 9.9%. But remember, even though these are short-term trades, this is a long-term strategy – a strategy based on the law of large numbers and statistical probabilities.

Ahead of a potential monster week for the market, with plenty of volatility, last week was fairly quiet for the indexes. The S&P 500 gained 0.7%, and the Dow and Nasdaq were mostly unchanged.

Ahead of a potential monster week for the market, with plenty of volatility, last week was fairly quiet for the indexes. The S&P 500 gained 0.7%, and the Dow and Nasdaq were mostly unchanged.

Big picture, it’s hard to find much wrong with the market, as the primary evidence (trends of the indexes, action of leading stocks) remains clearly positive. Thus, we’re generally holding our winners and think there’s a good chance last November marked a major turning point after nearly three years of growth stock sluggishness.

That said, near-term, we’re keeping our feet on the ground and going slow on the buy side, as there’s no question stocks have had a good run and many leaders are extended. Recently, we’ve trimmed a couple of positions but, tonight, we’re averaging up on one name to fill out our stake.

Despite some weakness early in the week, the indexes bounced back in a big way, closing at new all-time highs. For the week, the S&P 500 gained 1%, the Dow added 1.07%, and the Nasdaq soared higher by 2%.

The market had a great start to the year and then slumped in February. March started off with the best week in a month for the S&P 500. What’s next?

There will be a lot of information coming out this month that could determine whether the market rallies or slumps from here. This week, the Fed speaks and the February jobs report comes out. These events could give investors a better idea of how aggressive the Fed will remain.

This week, we comment on earnings from Bayer AG (BAYRY), Berkshire Hathaway (BRK/B), Dril-Quip (DRQ), Holcim (HCMLY), Kohl’s Corporation (KSS), Macy’s (M), Six Flags Entertainment (SIX), Viatris (VTRS), Volkswagen AG (VWAGY) and ZimVie Holdings (ZIMV).


Next week, we provide an update on earnings from ESAB (ESAB) and Duluth Holdings (DLTH), which should wrap up this earnings season.

WHAT TO DO NOW: The market remains in a pullback, with interest rate fears causing the indexes to slowly deflate. To this point, most indicators are still positive, though they’re leaning on the fence—yet there are many stocks and sectors that look ready to get going if the bulls can show up. All in all, we think how the Model Portfolio is situated (38% cash) makes sense here, though given the slippage, we will place ProShares S&P Fund (SSO) and Wingstop (WING) on Hold tonight. Details below.

Yesterday was Tesla’s annual investor day and it seems it came up a bit short regarding specifics.

Elon Musk started with a big number even by Washington standards, suggesting that realizing the vision for an energy transition could require some $7 trillion of investments in electric-vehicle manufacturing.

January was up. February was down. What’s next?


The S&P 500 rallied 6.2% in the first month of the year but pulled back 2.3% in February (as of Monday’s close). The market is still in positive territory YTD. But that could change.

As expected, the second half of February was pretty weak from a stock market return perspective.But February is over and March and April tend to be seasonally strong, according to Ryan Detrick of Carson Investment Research.

A few weeks ago, we introduced the Gartner Hype Cycle, which traces the path that all tech companies follow in what essentially is an immutable law of tech investing. Currently, tech stocks have passed the Peak of Inflated Expectations and are sliding down to the Trough of Disillusionment. A few will ascend back to prosperity along the “Slope of Enlightenment” if they maintain both their relevance and their competitive edge. But most will lose one or both of these traits and thus continue downward in what could be labeled the “Decline into Oblivion.”

The chart below follows the same pattern as the Tech Hype Cycle chart while it more specifically traces the pattern of revenues and profits. The peak of the Hype Cycle corresponds, of course, to the peak of the Sales cycle in the Maturity Stage. Most tech companies follow the Decline Stage line into oblivion.

Last week marked the fourth straight week of declines for the S&P 500 and was the worst week so far this year, down nearly 3%.

The problem is inflation, go figure. The Federal Reserve’s preferred measure of inflation, the Personal Expenditures Price Index (PCE), was much higher than expected in January and showed inflation moving higher, not lower, to start the year.

This week, we comment on earnings from Elanco Animal Health (ELAN), Gannett (GCI), Kaman Corporation (KAMN) and Warner Bros Discovery (WBD).

We also include the Catalyst Report and a summary of the March edition of the Cabot Turnaround Letter, which was published on Wednesday.

We’re in the thick of our portfolio’s earnings season so today’s update will be short and sweet. My focus this week is on providing updates on positions as they report and laying out expectations for companies that have not yet reported.

While our reports have been mostly good so far the market is still swinging with the interest rate breezes. I had thought that influence might diminish but with Fed members making hawkish public comments and expectations for more hikes after March both the 10-year and 2-year yield have become troublesome.

We’ll continue our mini-series on the Tech Hype Cycle next week, as we thought some brief comments on the war in Ukraine might be timely roughly one year after Russia’s invasion.

Clearly, the war is an awful situation for all involved, certainly on a humanitarian level but also on an economic level. While the conflict has degenerated into a World War I-style artillery battle between two entrenched forces, we anticipate that spring will bring more mobile hostilities.

Part of our risk management process is to identify risks, then gauge whether those risks are increasing, or decreasing. This simple directional metric avoids the impossible task of predicting the future yet provides an effective way to understand risks.

The impressive early year rally has ended. The S&P ended its third straight down week on Friday and is sharply lower to start this week.


The “soft landing” optimism of January has given way to concern about a hawkish Fed and rising long-term rates. Inflation had been coming down, and the Fed appeared to be chilling out while the economy remained on solid footing. But a continued strong economy, a rise in January inflation, and a more belligerent Fed are spoiling the party.

The Fed-induced rally yesterday has left a few of our positions with deltas that are shorter than we prefer. As a result, I want to buy back our short calls in those positions and sell more premium going out to a higher strike and further out in duration.

We got into CrowdStrike (CRWD) back in 2019 almost near the stock’s lowest publicly traded price (below 50).

As part of the Income Wheel approach, we allowed our GDX calls to expire in the money at expiration last week. As a result, our shares were “called” away at the price of 26, and we locked in 3.87% on the trade.

With 18 days left until expiration and our IWM iron condor worth $0.24, I want to go ahead and lock in some nice profits. We sold the iron condor for $0.75 just 13 days ago and are now able to lock in over 10% on the trade. If you choose to hold on to the trade, please be aware of the risks.

We want to bring the delta of our position back to “normal” state. In our terms “normal” means a delta between roughly 0.40 and 0.60. As it stands, with TLT rallying as of late, our deltas are near parity.

Moving Shell plc (SHEL) from Buy to Sell

We currently own the IEF January 19, 2024, 85 call LEAPS contract at $19.00. You must own LEAPS in order to use this strategy.

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

Our BITO 13.5 calls for the November 25, 2022, expiration cycle are essentially worthless. As a result, I want to buy back our BITO calls, lock in our premium and immediately sell more premium.

With the Russell 2000 ETF (IWM) trading for 184.87, I want to place a short-term iron condor going out 30 days. My intent is to take off the trade well before the December 16, 2022, expiration date.

We currently own the EEM January 19, 2024, 30 call LEAPS contract at $11.50. You must own LEAPS in order to use this strategy.

Shares of Treace Medical (TMCI) have sold off this morning following the publishing of a short report from Culper Research.

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.