Ahead of the long holiday weekend the market had yet another good week. The S&P 500 gained 1.75%, the Dow rallied 1.5%, and the Nasdaq rose another 1.9%.

This week in an attempt to diversify the portfolio we are adding an energy play.

Friday was an encouraging day, not just because the indexes were up—for the first time in a while, we finally saw a few stocks that were holding up well really pop higher. However, does that change what we’re thinking? Not yet—from a top-down perspective, the intermediate-term trend remains for the indexes and the vast majority of individual stocks. The way we’d think about it is that what we’re seeing out there is a good first step, but the market will have to show more to gain enough momentum for a sustained advance. We’ll leave our Market Monitor at a level 5 for now.

This week’s list targets many of the stocks that are perched near (or are already hitting) new high ground. Our Top Pick is leading a possible new group move in cybersecurity stocks—you can start small here, though we prefer to look for pullbacks as selling on strength is still the norm in the market.

The market is holding up surprisingly well despite an onslaught of bad economic and geopolitical headlines of late. Perhaps it’s a sign the bears are running out of ammo. So this week, we add a stock that has clearly attracted the eye of what few buyers are out there right now – to the point where it’s gotten the attention of several Cabot analysts. Chief among them is Mike Cintolo, who recommended this stock to his Cabot Top Ten Trader audience recently.

Details inside.

We were able to sell calls against our BITO shares early last week. Otherwise, as I stated last week, all continues to be well as we head towards the October 20, 2023, expiration cycle. There isn’t much to do other than allow time decay to work its magic as we head closer and closer to the end of the October 20, 2023, expiration cycle. If our positions act accordingly, we have the opportunity to buy back our positions early, lock in profits, and bring in 5% to 10% worth of call premium over the next week or two.

Okay everyone, the wait is over: Earnings season is back. While the next few weeks will start rather slowly for earnings announcements, we should still see two to three trades before earnings season begins to truly pick up.

This week we have the big banks kicking things off, per usual. My hope is that we can get one, if not two trades off this week.

We added a November 17, 2023, bull put spread in SPY last week, which gives us three positions. The addition of our bull put spread essentially forms another iron condor, although I will be managing the bear call spread and bull put spread in SPY separately.

Last week the stock market once again had some wild ups and downs, led mostly by volatile moves in the bond market. And while the start of the week was ugly, the action Friday was impressive – though the situation in the Middle East may throw those good vibes from Friday right out the window. By week’s end the S&P 500 had gained 0.5%, the Dow had fallen 0.3%, and the Nasdaq had risen by 1.6%.

Last week the stock market once again had some wild ups and downs, led mostly by volatile moves in the bond market. And while the start of the week was ugly, the action Friday was impressive – though the situation in the Middle East may throw those good vibes from Friday right out the window. By week’s end the S&P 500 had gained 0.5%, the Dow had fallen 0.3%, and the Nasdaq had risen by 1.6%.

The market remains in a correction, with most indexes, sectors and stocks in control of the sellers, and until that changes, we’re advising a cautious stance with plenty of cash and little new buying; in the Model Portfolio, we trimmed further this week and are up to around 65% in cash.

That said, we’re staying alert for many reasons, not the least of which is that we’re starting to see some real, true oversold readings (which we consider “alerts”) and because more than a few growth stocks are resisting the decline, hitting higher lows since August. That’s not a reason to buy, but we’re keeping our watch list in good shape and are ready to move if the buyers appear.

Explorer stocks, with the exception of Neo Performance (NOPMF), held their own in a difficult week. The market concerns center on the impact of high interest rates and mortgage rates on consumer spending, investment, and economic growth.

We’re switching things up this month, steering clear of high-tech, medical devices and other fancy types of companies.

This company is super easy to understand, sells a product pretty much everybody adores, has a seasonal tailwind and is executing on its profit growth agenda.

All the details are inside this month’s Issue.

Ahead of the long holiday weekend the market had yet another good week. The S&P 500 gained 1.75%, the Dow rallied 1.5%, and the Nasdaq rose another 1.9%.

This week in an attempt to diversify the portfolio we are adding an energy play.

This note includes the Catalyst Report, a summary of the October edition of the Cabot Turnaround Letter, which was published on Wednesday, and bullet points of our podcast.

We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.

Stocks are having another terrible day today, with investor fears building that the Fed will push the economy into a deep recession. As of 2:10 pm, the Dow is off 656 points and the Nasdaq is plunging 409 points.

The market tried to stage a small rally yesterday. But the combination of a consistently hawkish Fed, rising concerns of a global recession and increased risk of something going sideways in the financial markets (witness the Bank of England launching an emergency government bond buying program) is making it tough for the market to get off its knees. Stocks are selling off again today.

The market hit a new bear market low. That means that the summer rally was indeed just a bear market rally. And stocks may go lower.

Two things spooked investors, persistent inflation and a consequentially persistent Fed. After four Fed rate hikes, a bear market, and two straight quarters of negative GDP growth, inflation remains sky high and barely budging. The Fed will have to remain hawkish for longer.

The Fed insinuated that it is willing to drive the economy into recession, or deeper recession, to tame inflation. That makes it increasingly likely that only a hard landing can bring prices down. The economy is likely to weaken in the months ahead, dragging corporate earnings down with it.

Greentech is in a zone of support. While it has declined about 14% in the past two weeks, which is discouraging, we’re seeing buying coming in at current levels, where, technically, is an area we want to see bulls pushing back. Overall, the Greentech Timer is telling us to be cautious – it’s below all three of the moving averages we watch and on Friday, trading broke support from an earlier gap higher. The area of real concern for our sector would come with another 10% decline from today’s levels.

As I think about where we are in the economic cycle, I think financials should be relatively well positioned.

The awful financial market conditions continue to deteriorate. As everyone knows, the domestic stock market ticked below its midsummer low and is now down over 23% from its November 2021 peak. Stock prices in developed country markets have fallen in local terms just as much if not more that the major U.S. stock indices. Emerging market returns (in local terms) have slid 21% YTD. With the awe-inspiring gains in the U.S. dollar, up 19% YTD, global stock returns for American investors have been downright dismal.

To kick things off to better understand the world today, I want to start with recent comments by John Paulson. John made his fortune shorting subprime mortgages during the 2008 housing bubble.

Here we highlight comments on gold because it is one of the world’s most traded and highly sought-after commodities. Gold does share traits with Bitcoin, and BTC should trade similarly to gold over the next 10 years.

The stock market continues its downward slide as investors started to fully appreciate the pace and scale of rate hikes by central banks around the world. Still, several of our companies provided noteworthy updates, noted below and in our podcast.

Well, the market got exactly what it expected yesterday when the Fed hiked by 75bps (the odds were over 80% that’s what they’d do). Fed Chair Jerome Powell’s messaging was consistent with what he said back in August in Jackson Hole.

FedEx (FDX) reports earnings later today and all will be watching as its shares tumbled last week after it issued a sales warning. The Federal Reserve issued its fifth interest rate hike of 2022, and it certainly won’t be the last one, warned dove-turned-hawk Fed Chairman Jerome Powell. This brisk run-up in rates, which should have been earlier and faster, is hitting growth stocks hard since those are mostly high revenue growth companies that are not yet profitable. The market is punishing this group to levels that tempt longer-term investors.

It’s all about the Fed today. The woefully behind-the-curve Central Bank will announce another Fed Funds rate hike today. The increase is widely expected to be another 0.75%. But some worry it could be 1.00%.

The market’s hopes were dashed when August inflation was worse than expected. That means the Fed will have to continue to be hawkish and for a while longer. Plus, after four rate hikes so far, two straight quarters of GDP contraction, and a bear market; inflation isn’t budging yet.

Despite many ups and downs, and a trade that went south fast (ZIM), the CPB portfolio held up fairly well during the most recent market rout. Not all trades are winners, but big picture, given the carnage, I’m fairly happy with June expirations trades. Let’s dive in:

Our timing was incredibly fortunate for this one as XOP pushed significantly lower almost immediately after our alert was sent.
Now I want to close out our XOP July 15, 2022, 190/195 bear call spread today for $0.04. By closing out the trade today we can lock in roughly 15%.

First, I wanted to thank all of you for the kind words regarding yesterday’s webinar. I hope all of you found it helpful. As I stated in the webinar, if you have any suggestions, comments or questions please do not hesitate to email me at andy@cabotwealth.com. I appreciate all of your feedback as we want to make all of our webinars an engaging monthly event for everyone.

The market is taking it on the chin today (again) as interest rates soar (+6% to 3.35% and a new 2022 high) and inflation/recession fears tick up. I had ZoomInfo (ZI) on high alert last week given its proximity to support near 33.8.

As I stated last Wednesday, going forward I plan to shorten the alerts. If you still have any questions, please check out the prior alerts or, even better, take a look at the strategy guides on your subscriber page.

Today’s inflation data (CPI) wasn’t expected to be great but was even a little worse than anticipated as consumer prices rose 8.6%. That’s up from 8.5% in March and 8.3% in April. One can slice and dice the data a lot of ways but if you want to flag the main issues, they are probably energy and food prices.

I just wanted to give everyone a brief update that I’ve decided to wait until Monday to send out a trade alert for trades in the Vanguard Total Stock Market ETF (VTI) and iShares 20+ Year Treasury Bond ETF (TLT).

In today’s trade alert, like my last one, I want to start out by selling cash-secured puts with the intent of eventually wheeling into the position.
But I also want to place a trade that’s a bit more on the aggressive side as well. Some of you may be interested, others the opposite due to the underlying. But remember, we are trading statistics. The underlying is almost secondary. I’ll explain below.

Last Friday I sent out our first official trade alert in SPDR Gold Trust ETF (GLD).

We went through the trade step by step in hopes that you have a better understanding of the strategy. I plan on doing the same for our trades today, but the remainder of the trades going forward will be significantly shorter, focusing on the trade and the associated statistics.

Patience is a valuable attribute for sailors who are waiting for the wind to change. And patience is a key attribute for long-term investors. Investors who are impatient are the ones who sell at the bottom and then sit on the sidelines as stocks move back up.



So patience is what I continue to counsel for readers with losses in the stocks in our portfolio.

The SPDR S&P 500 Oil & Gas ETF (XOP) has pushed into an extreme overbought state. Typically when this type of extreme reading occurs the directional trend stalls or simply pulls back, at least momentarily.

Now, I know I don’t have the ability to consistently “guess” the direction a stock or ETF is headed over really any time frame. But what I can do is consistently wrap a high-probability strategy around an extreme in the market and offer myself an 80%+ probability of success on each trade I place.

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.