The market has been stagnant for the last month, but that’s not necessarily a bad thing. It could be a nice, long deep breath – in what is historically the market’s worst-performing month – before the next big push in this still-new bull market. But just in case it goes the other direction, today we add a low-risk utility stock that’s having a down year but tends to beat the indexes over time. It’s a longtime favorite of Cabot Dividend Investor Chief Analyst Tom Hutchinson.

Details inside.

We locked in another profitable trade last week, our October 20, 2023, SPY iron condor for a 10.4% gain. We were in the trade for 27 days. As it stands, our overall return is 156.4%, with an average hold time of 21 days. My hope is to extend those gains this week as I intend on locking in, if all goes well, a similar return in our IWM iron condor. Moreover, I intend on adding at least one to two additional trades this week.

We locked in some nice gains prior to expiration last week which brought our total return to 102.2%.

We also allowed our WFC short puts to carry through expiration and since the underlying price of WFC was below our short put strike we were assigned shares of WFC. As a result, we plan on selling calls against our newly acquired shares as we enter the covered call portion of the income wheel strategy in WFC.

The earnings doldrums are upon us, but we still have one potential opportunity this week, most notably a chance for a trade in FedEx (FDX). The company is due to announce after the closing bell Wednesday, so if I do send a trade alert, expect to see the alert around 2 p.m. ET that day.

It was a fairly quiet week in terms of the leading indexes’ performance as the S&P 500 fell marginally, the Dow mostly finished the week unchanged, and the Nasdaq fell by 0.4%.

It was a fairly quiet week in terms of the leading indexes’ performance as the S&P 500 fell marginally, the Dow mostly finished the week unchanged, and the Nasdaq fell by 0.4%.

We’re still playing the seesaw game in the markets—up, down, up, down, etc. I don’t see any need for excess worry; just a little caution that we buy the right stocks. I’m still very long-term bullish, and why not?

The economy continues to strengthen; 79% of the companies in the S&P 500 Index reported positive earnings surprises for the second quarter, and the third quarter looks even better; home building continues to be strong, although low inventory levels continue to pressure resales. Home prices appear to be stabilizing, and employment remains strong.

The soothsayers seem to think that the Fed will keep rates steady at its next meeting, and the probability of a recession has fallen to 16%. What’s not to like?

This year’s strong market has surprised most pundits. Hopefully, the good times last. Anything is possible.

I don’t want to get into the business of trying to predict what the market will do over the rest of the year. Even if you get things right, some stupid headline can come out of nowhere and change all the math. There’s a much better way than market timing.

Buying good stocks cheap is perhaps the best way to assure good returns over time. Different market sectors go in and out of favor all the time. Technology stocks were out of favor at the beginning of this year. No one wanted energy stocks at the beginning of 2021.

You may not think there are a lot of bargains anymore. Sure, it’s a bull market for the indexes. But it is still the darkest days of the bear market in certain places. Defensive stocks in utilities and other sectors are wallowing near the lows of last October while the indexes are whooping it up.

In this issue, I highlight three defensive portfolio positions. These stocks are all selling near 52-week lows and, in some cases, multi-year lows. But operational results at these companies have been as strong as ever. And all these currently out-of-favor stocks have long histories of superstar performance that blows away the returns of the overall market.

Forget the Fed, and inflation, or the velocity of the landing. Buying some of the very best dividend stocks on the market near the lowest valuation at which they ever sell should be a money-making strategy regardless of what happens with all that other stuff.

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.

Some of the positives that we saw in the latter half of August are still hanging around, not the least of which is a good amount of resilience from growth stocks that popped higher on earnings or otherwise saw good-volume buying. That said, the market as a whole doesn’t look ready, with last week bringing another round of selling in the broad market and the major indexes—the intermediate-term trend never could turn up, and few stocks are really moving up at this point. Long story short, there are some encouraging pieces of evidence, but more patience is likely needed. We’ll leave our Market Monitor at a level 6.

This week’s list is pretty well-rounded, with stocks from a variety of groups and of different sizes and profiles. Our Top Pick is a clear winner in the drug space with two big sellers; we’re OK grabbing a few shares here or (preferably) on dips.

Stocks took a predictable early-September hit last week, but the damage was minimal, and it appears the indexes want to go up – pending the results of this Wednesday’s inflation data, of course. Chinese stocks, meanwhile, haven’t gone anywhere but down for a while, but today we take a contrarian view by adding a big-brand Chinese company that Carl Delfeld just added to his Cabot Explorer portfolio. Sure, China’s economy has underwhelmed, but that’s not likely to be the case for long. And today’s addition is poised to lead China’s recovery.



Details inside.

The earnings doldrums are upon us, but we still have a few potential opportunities this week, most notably a chance for a trade in Oracle (ORCL). The company is due to announce after the closing bell today, so if a trade alert is sent, expect to see the alert around 2 p.m. ET.

The strong 17% market rally is over. The S&P 500 is down 7.4% in the second half of August. And here comes Labor Day.

Sobered-up investors start paying attention again after Labor Day. And they can be cranky. That’s why September is historically the worst-performing month. Refocused investors probably won’t like what they see this year.

The optimism of the two months after the June low has faded.

In American football, most quarterbacks are right-handed. So, when they drop back to pass, they typically turn their backs to the left side of the line of scrimmage. They are essentially blind to what happens behind them. If the offensive line is weak, the quarterback is vulnerable to a potentially devastating hit, risking not only that particular play but also possession of the ball and possibly serious injury.

We’re not buying or selling any positions with this update. We are, however, going to recommend converting REE warrants to shares under a company tender. More below.

After a very strong summer rally, the S&P 500 has pulled back sharply.
The cause for concern appears to be Jerome Powell’s guidance from his speech last Friday.

The market has turned south again. And things could be worse in September.

Blame the Fed. Blame inflation. Blame recession. Investors can’t look past them anymore. The market had rallied on hopes that inflation peaked, and the Fed will be all done hiking rates by the beginning of next year. But the Fed poured cold water on those hopes.



The end of this Fed hiking cycle is no longer in view after the recent hawkish statements by the Central Bank. The Fed indicated again last week that it is willing to induce a deeper recession to conquer this inflation. Rates may continue to rise well into next year and investors can’t see the light at the end of this tunnel anymore.

Following the fed summit at Jackson Hole, global markets retreated as investors try to understand the pace of interest rate increases.

Interest represents the time value of money. Borrowers rent money and pay interest for its use.

Gold and silver remain laggards in the broad metals market (no surprise there!). Thankfully for investors, however, other industrial metals are starting to strengthen after the setbacks of recent months and are picking up the slack in the precious metals market.

This note includes our review of earnings from Macy’s (M). Next week, Duluth Holdings (DLTH) reports earnings.

This rise of the U.S. dollar against the yen, euro and pound as well as most other currencies in the world is a mixed blessing for investors. You can take your capital gains and head to Europe or Japan for a trip and imported goods will be cheaper. On the other hand, American companies and stocks will be hurt by their exports being more expensive to overseas buyers and their overseas earnings will be worth less in U.S. dollars when brought back to America.

After bumping up against its 200-day moving average line the S&P 500 has pulled back this week. The S&P 600 Small Cap Index has followed suit.

The torrid 17% rally from the June low is sputtering. That makes this market dangerous.
After bleeding all year because of persistent high inflation and a hawkish Fed, the market rallied on newfound optimism. The market anticipates six to nine months down the road and investors envisioned a Fed that is all done hiking rates by then amid falling inflation. But that’s optimistic. And the optimism has been waning.

Stocks are down this week after hitting resistance at their major moving averages and trendlines. So far the recent move back seems very normal after enjoying a good rally. Where it goes from here will determine if the recent summer rally has run its course or if we’ll see the re-establishment of a bullish move higher.

The market’s implosion is continuing today, with the indexes hitting new lows and many individual stocks in freefall. The selling is getting emotional, and the conditions are in place for some sort of low in the market soon, but those secondary indicators have had no effect in recent days.

Our stop-loss mark on Advanced Water Systems (WMS) was tripped Friday, and with its weaker open today, we’re recommending selling.

As we march toward a well-deserved weekend, the market is looking to hold support (S&P 500 holding up so far while Nasdaq has cracked a little). There’s no sugarcoating it – this has been a horrific week. But if there is a glass half full perspective it’s that when everybody is bearish it just might be time to start buying.

Procept BioRobotics (PRCT) delivered another “beat and raise” quarter after the close yesterday (third since going public) with revenue up 97% to $14.2 million ($2.1 million beat) and GAAP EPS of -$0.39 beating by $0.10.
Pretty much everything was good, starting with a $4 million increase to full-year guidance, which now sits at $58 - $62 million (+68% - 80%). Hospitals report second and third urologists are starting to use systems (i.e., expansion within hospitals) and also using the robots on smaller prostates (i.e., market expansion). In some cases, Aquablation is becoming the standard of care.

The shine from the Fed’s press conference yesterday came off early this morning and it’s turned into an ugly day. It’s another one of those days (we’ve had too many this year) where it feels wrong to be a buyer and wrong to be a seller. Classic bear market.

The market is mostly down this morning, but its growth stocks that are again unraveling—as of 11:15 am EST, the Dow is up 18 points, but the Nasdaq is down 173 points and growth funds are down much more than that.

Revolve (RVLV) beat on both the top and bottom lines. Revenue of $283.5 million was up 58% and beat by $26.7 million. GAAP EPS of $0.30 was flat with the year-ago quarter and beat estimates by $0.03, despite a 28% increase in the effective tax rate. Gross margin was up almost half a percentage point to a record 54.5% despite higher freight costs.

This morning we learned via an SEC filing that Shutterstock (SSTK) CEO Stan Pavlovsky has voluntarily resigned from his position as CEO and from the board of directors. He notified the company on April 27 and his resignation is effective today. The news was just made public today. The board has appointed current Executive Chairman and former CEO Jonathan Oringer as Interim CEO. Mr. Oringer was the founder of Shutterstock in 2003.

Silvergate Capital (SI) reported Q1 2022 results yesterday morning and held a conference call later in the day. Digesting the results took some time but at a high level the trends are very solid, despite a somewhat messy quarter for crypto markets. Here are the main bullet points.

The market’s decline in April was ugly but under control, but the end of last week and today have seen bigger air pockets emerge—not only have the major indexes fallen sharply, but other strong areas (like commodities) and safe havens (consumer staples) have come under pressure.

The bearish close of last week triggered some of our sell-stops and we should sell the following positions today.

The market got off to a decent start to the week, but things have deteriorated for many names over the last two days. There are a few stocks that I had anticipated selling relatively soon, hopefully into some strength.

While things can turn up quickly, especially during earnings season, the market’s downturn over the last two days suggests we should drop a couple of names today.

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.