Issues
While the volatility continues, the markets made some upward progress since our last issue, with all the broad indexes rising—although both Growth and Value stocks are still negative, year to date.
Sector-wise, all sectors— except for Energy (-6.02%), Technology (-7.34%) and Consumer Discretionary (-11.17%)—are in the black, led by Utilities (+5.10%), Consumer Staples (+3.66%), and Real Estate (+2.98%).
The Federal Reserve meets this week, but most economists expect no change in interest rates (for now). We’ll see how inflation is faring next week, which should give us some insight as to future Fed action and whether or not we can anticipate any rate relief this summer.
Sector-wise, all sectors— except for Energy (-6.02%), Technology (-7.34%) and Consumer Discretionary (-11.17%)—are in the black, led by Utilities (+5.10%), Consumer Staples (+3.66%), and Real Estate (+2.98%).
The Federal Reserve meets this week, but most economists expect no change in interest rates (for now). We’ll see how inflation is faring next week, which should give us some insight as to future Fed action and whether or not we can anticipate any rate relief this summer.
Japan is back as a place to invest some capital for a number of reasons.
Japanese retail investors have cash positions above 50% versus about 15% for Americans.
Japanese corporates have long been criticized for hoarding cash on their balance sheets and low capital expenditures due to cross-shareholdings with sister companies. But over the past 12 months, share buybacks are on track to increase 96% year-over-year, and the reduction in cross-shareholdings has increased by 75% in the last fiscal year.
All this leads us to consider today a second Japanese stock as an Explorer recommendation.
Japanese retail investors have cash positions above 50% versus about 15% for Americans.
Japanese corporates have long been criticized for hoarding cash on their balance sheets and low capital expenditures due to cross-shareholdings with sister companies. But over the past 12 months, share buybacks are on track to increase 96% year-over-year, and the reduction in cross-shareholdings has increased by 75% in the last fiscal year.
All this leads us to consider today a second Japanese stock as an Explorer recommendation.
The market continued its strong rebound from its early-April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.
Given where we stood a month ago, you couldn’t have asked for much better action from the market—now it’s a matter of following through: The intermediate-term trend is on the fence, and many individual stocks have been (possibly temporarily) rejected near obvious resistance levels. Thus, if we see further strength this week, turning the trend up for many indexes and allowing some fresh leaders to take off, we’ll look to extend our line—but if the sellers dig in, more patience will be needed. Right now, we’re sticking with our Market Monitor at a level 5, and we’ll adjust if need be in the days ahead.
This week’s list has a lot of strong names, including a few that have recently reacted well to earnings. Our Top Pick is one of the stronger names in one of the strongest growth areas (cybersecurity). We’re OK starting small here.
This week’s list has a lot of strong names, including a few that have recently reacted well to earnings. Our Top Pick is one of the stronger names in one of the strongest growth areas (cybersecurity). We’re OK starting small here.
Stocks are in a much better place than they were a couple weeks ago. That’s what nine consecutive days of gains will do, as earnings season and a cooling of tariff rhetoric have combined to inject some positivity into what was a doom-and-gloom market environment as recently as mid-April. We surely haven’t heard the last about tariffs, and this week’s Fed meeting can always reopen some old wounds. But we can only go with the evidence in front of us, and right now it’s pointing upward. With that in mind, today we add a growth stock recently recommended by Mike Cintolo in his Cabot Top Ten Trader advisory.
Details inside.
Details inside.
The market continued its strong rebound from its early April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.
The market continued its strong rebound from its early April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.
We’re putting our mining helmets back on today and taking a position in a speculative micro-cap gold and copper exploration company that’s just about to get the drills turning.
This type of stock is intended to scratch the speculator’s itch. It’s not suitable for investing money that you need. That said, if things go well – and I think there’s a good chance they will – the returns could be spectacular.
But please, go in with eyes wide open. This is supposed to be fun.
This type of stock is intended to scratch the speculator’s itch. It’s not suitable for investing money that you need. That said, if things go well – and I think there’s a good chance they will – the returns could be spectacular.
But please, go in with eyes wide open. This is supposed to be fun.
The evidence has improved during the past couple of weeks, with our Two-Second Indicator looking much better and, importantly, a Three Day Thrust signal (one of our Blastoff Indicators) flashing green last week, both of which prompted us to put a little money to work last week. Still, while that’s definitely a feather in the bulls’ cap, the primary evidence remains negative, so we’re continuing to hold plenty of cash while setting our sights on next week: If our Tides turn positive and many potential leaders gap on earnings (there are tons of names reporting next week), we’ll definitely be putting a good chunk of money to work ... but as always, we’ll take it as it comes, which today means going slow but staying flexible should the market’s recent good vibes accelerate.
Few industries were more negatively impacted by Covid than the cruise industry. And few have come roaring back faster in Covid’s wake. And yet, share prices haven’t kept up with the record sales and passenger numbers. So today, we recommend a major cruise-industry stock that has the largest disparity between sales and earnings growth and share price growth. We also have updates on all our existing stocks as investors mercifully put a historically choppy April for the market in the rear-view mirror and flip the calendar to what will hopefully be a far more fruitful May.
Details inside. Enjoy!
Details inside. Enjoy!
Cannabis stocks continue to post sharp rallies on rumors of progress on federal policy developments like banking reform and rescheduling. Then the stocks give it all back over the next day or two.
There are two ways to deal with this trend.
There are two ways to deal with this trend.
“What’s that got to do with the price of eggs?” is an adage that was once commonly used to question the relevance of a particular subject introduced to a conversation. But in light of current economic conditions—and as it pertains to this month’s stock recommendation—that question is entirely relevant.
Indeed, the price of eggs is just one of many concerns for millions of Americans today as inflation remains a thorn for the economy and for policymakers. Record-high egg prices have become emblematic of the larger question of inflation’s persistence, particularly for retail food costs.
Indeed, the price of eggs is just one of many concerns for millions of Americans today as inflation remains a thorn for the economy and for policymakers. Record-high egg prices have become emblematic of the larger question of inflation’s persistence, particularly for retail food costs.
Updates
Small caps are up a very, very small amount over the last week. In fact, the S&P 600 SmallCap Index has hardly moved over the last five sessions.
I think that’s remarkable given everything that’s gone on lately.
The DeepSeek drama inspired a truly magnificent wipeout for the broad market on Monday. And we had an FOMC meeting yesterday that barely registered on the S&P 600.
I think that’s remarkable given everything that’s gone on lately.
The DeepSeek drama inspired a truly magnificent wipeout for the broad market on Monday. And we had an FOMC meeting yesterday that barely registered on the S&P 600.
There are a lot of things the stock market can handle.
In 2024 alone, stocks advanced more than 20% despite two major overseas wars raging, high interest rates, stubborn inflation, escalating unemployment, a toss-up presidential election in which one of the candidates changed midsummer, tepid consumer confidence, etc. That’s because, aside from Kamala Harris replacing Joe Biden as the Democratic candidate less than four months before the election, most of these potential headwinds were known. What Wall Street fears most is the unknown. And that’s why DeepSeek rattled markets on Monday.
In 2024 alone, stocks advanced more than 20% despite two major overseas wars raging, high interest rates, stubborn inflation, escalating unemployment, a toss-up presidential election in which one of the candidates changed midsummer, tepid consumer confidence, etc. That’s because, aside from Kamala Harris replacing Joe Biden as the Democratic candidate less than four months before the election, most of these potential headwinds were known. What Wall Street fears most is the unknown. And that’s why DeepSeek rattled markets on Monday.
The catalyst that has driven this market higher for more than two years got punched in the face on Monday. Is it the end of the gravy train or just an overreaction?
Stocks came crashing down on Monday. The S&P 500 was down almost 2% and lost most of this year’s gains in one day. The tech-laden Nasdaq index fell more than 3%. It was all because of some upstart Chinese company.
Stocks came crashing down on Monday. The S&P 500 was down almost 2% and lost most of this year’s gains in one day. The tech-laden Nasdaq index fell more than 3%. It was all because of some upstart Chinese company.
In today’s note, we discuss pertinent developments and ratings changes for some of the stocks in the portfolio, including Agnico Eagle Mines (AEM), Alcoa (AA), American Airlines (AAL), GE Aerospace (GE), SLB Ltd. (SLB) and UiPath (PATH).
Projected strength in U.S. commercial loan growth and continued increases in M2 money supply bode well for the stock market’s liquidity backdrop.
Projected strength in U.S. commercial loan growth and continued increases in M2 money supply bode well for the stock market’s liquidity backdrop.
The market has been singing a more bullish tune lately and small caps are back in the headlines.
That’s because small caps enjoyed a nice rally after last week’s CPI and PPI data came out and the 10-year yield retreated.
Market observers have seen that the market rally has been broadening beyond just the Magnificent 7 and that small and mid-caps (SMID-caps) have been getting in on the action as well.
That’s because small caps enjoyed a nice rally after last week’s CPI and PPI data came out and the 10-year yield retreated.
Market observers have seen that the market rally has been broadening beyond just the Magnificent 7 and that small and mid-caps (SMID-caps) have been getting in on the action as well.
The Trump Administration is off and running along with Cabot Explorer stocks as markets closely watch the potential for tariffs on Canada, China, and Mexico.
Mexico and Canada are America’s two largest trade partners, and both countries are bracing for major economic disruption should Trump follow through. Mexico and Canada send about 80% of their exports to the U.S. Market turbulence in stocks based in Mexico or Canada could create an opportunity for us.
Mexico and Canada are America’s two largest trade partners, and both countries are bracing for major economic disruption should Trump follow through. Mexico and Canada send about 80% of their exports to the U.S. Market turbulence in stocks based in Mexico or Canada could create an opportunity for us.
What a difference a week makes!
Early last week, things were looking pretty gloomy for the market, with stocks on a six-week losing streak dating back to early December and interest rates, as measured by the 10-year Treasury yield, stretching to 14-month highs. More than 300 stocks on the New York Stock Exchange and Nasdaq were trading at 52-week lows.
Early last week, things were looking pretty gloomy for the market, with stocks on a six-week losing streak dating back to early December and interest rates, as measured by the 10-year Treasury yield, stretching to 14-month highs. More than 300 stocks on the New York Stock Exchange and Nasdaq were trading at 52-week lows.
While the market news is inundated with Trump stories as he has issued a massive number of executive orders on his first day in office, the real market catalyst right now actually started last week.
There were a slew of executive orders affecting the energy industry but no real surprises. The improving story remains essentially the same since the election. There was likely some relief that large tariffs have not been announced, at least so far. But the Trump news is overshadowing last week’s market-altering news.
There were a slew of executive orders affecting the energy industry but no real surprises. The improving story remains essentially the same since the election. There was likely some relief that large tariffs have not been announced, at least so far. But the Trump news is overshadowing last week’s market-altering news.
A week ago, the market was teetering on the brink. But it teetered in the right direction.
The benchmark ten-year Treasury rate had soared above 4.8%, dangerously close to the late 2023 peak of about 5%. December CPI inflation was reported last week. A bad number could have thrust the 10-year rate above the peak, almost certainly prompting a selloff in stocks. But Wall Street was happy with the number and things went the other way.
The benchmark ten-year Treasury rate had soared above 4.8%, dangerously close to the late 2023 peak of about 5%. December CPI inflation was reported last week. A bad number could have thrust the 10-year rate above the peak, almost certainly prompting a selloff in stocks. But Wall Street was happy with the number and things went the other way.
In today’s note, we discuss pertinent developments and ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Atlassian (TEAM), GE Aerospace (GE), SLB Ltd. (SLB), Starbucks (SBUX), Super Hi International Holding (HDL) and Teladoc Health (TDOC).
The market’s trends were looking pretty iffy until better-than-feared inflation data came out on Tuesday (PPI) and Wednesday (CPI).
Those data releases finally gave Treasuries a boost and knocked the 10-year yield down from last week’s level of 4.8%, which was the highest since November of 2023 (the 10-year yield hit 4.74% last April, which was close, but not quite as high as last week).
Those data releases finally gave Treasuries a boost and knocked the 10-year yield down from last week’s level of 4.8%, which was the highest since November of 2023 (the 10-year yield hit 4.74% last April, which was close, but not quite as high as last week).
WHAT TO DO NOW: Remain cautious but stay alert. The five-week drubbing for the broad market and many growth titles has caused sentiment to really drop (a good thing), and this week’s bounce (as interest rates dipped) is intriguing … but at this point, we’ve seen one decent day of action after five tough weeks, so we’ll stand pat with our large (60%-ish) cash position and watch closely to see how this rally develops.
Alerts
Sell Veralto (VLTO); Note on Rivian (RIVN); AST Spacemobile (ASTS) Taking off
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.
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.
Shares of Zeta (ZETA) are up about 5% this morning after the company announced it will acquire LiveIntent, a people-based marketing technology company founded in 2009.
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.
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.
Portfolios
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Earnings Trader.
| Transaction Date | Poor Man’s Covered Calls | Original Price | Current Price | LEAPS Price | LEAPS Price | LEAPS Price | Premium Sold | Closing Price | Total Premium | Total Return | Position Delta |
| SPDR Gold Shares ETF (GLD) | $172.46 | $166.79 | (open) | (current) | (closed) | (current) | ($5.67) | ||||
| 6/3/2022 | LEAPS January 19, 2024 145 call | $37.00 | $30.20 | ($6.80) | 80 | ||||||
| 6/3/2022 | July 15, 2022 181 call | $1.00 | $0.12 | $0.88 | |||||||
| 6/30/2022 | August 19, 2022 175 call | $1.91 | $0.21 | $1.70 | |||||||
| 7/28/2022 | September 16, 2022 169 call | $1.90 | $0.07 | $1.83 | |||||||
| 9/1/2022 | October 21, 2022 165 call | $1.45 | $0.03 | $1.42 | |||||||
| 10/14/2022 | November 18, 2022 159 call | $1.48 | $4.45 | ($2.97) | |||||||
| 11/10/2022 | December 16, 2022 169 call | $1.40 | $1.02 | $0.38 | |||||||
| 12/13/2022 | January 20, 2023 172 call | $1.96 | $1.12 | $1.96 | -27 | ||||||
| Totals | $11.10 | $35.40 | 53 | ||||||||
| Transaction Date | Poor Man’s Covered Calls | Original Price | Current Price | LEAPS Price | LEAPS Price | LEAPS Price | Premium Sold | Closing Price | Total Premium | Total Return | Position Delta |
| Invesco DB Commodity Index Tracking Fund (DBC) | $30.45 | $24.16 | (open) | (current) | (closed) | (current) | ($6.29) | ||||
| 6/8/2022 | LEAPS January 19, 2024 22 call | $10.50 | $4.00 | ($6.50) | 70 | ||||||
| 6/8/2022 | July 15, 2022 32 call | $0.55 | $0.05 | $0.50 | |||||||
| 6/30/2022 | August 19, 2022 29 call | $0.50 | $0.05 | $0.45 | |||||||
| 7/28/2022 | September 16, 2022 27 call | $0.55 | $0.10 | $0.45 | |||||||
| 9/7/2022 | October 21, 2022 26 call | $0.50 | $0.00 | $0.50 | |||||||
| 10/25/2022 | December 16, 2022 27 call | $0.45 | $0.05 | $0.40 | |||||||
| 12/13/2022 | January 20, 2023 25 call | $0.45 | $0.35 | $0.45 | -33 | ||||||
| Totals | $3.00 | $6.75 | 37 | ||||||||
| Transaction Date | Poor Man’s Covered Calls | Original Price | Current Price | LEAPS Price | LEAPS Price | LEAPS Price | Premium Sold | Closing Price | Total Premium | Total Return | Position Delta |
| iShares Trust 7-10 Year Treasury Bond ETF (IEF) | $101.93 | $98.61 | (open) | (current) | (closed) | ||||||
| 6/8/2022 | LEAPS January 19, 2024 85 call | $19.00 | $16.25 | ($2.75) | 81 | ||||||
| 6/8/2022 | July 15, 2022 103 call | $0.70 | $0.19 | $0.51 | |||||||
| 7/14/2022 | August 19, 2022 105 call | $0.58 | $0.12 | $0.46 | |||||||
| 8/11/2022 | October 21, 2022 105 call | $1.20 | $0.04 | $1.16 | |||||||
| 9/22/2022 | October 21, 2022 98.5 call | $0.55 | $0.05 | $0.50 | |||||||
| 10/12/2022 | November 25, 2022 97 call | $0.92 | $0.18 | $0.74 | |||||||
| 11/17/2022 | December 16, 2022 98 call | $0.50 | $0.86 | ($0.36) | |||||||
| 12/13/2022 | January 20, 2023 100 call | $0.88 | $0.74 | $0.88 | -35 | ||||||
| Totals | $5.33 | $20.14 | 46 | ||||||||
| Transaction Date | Poor Man’s Covered Calls | Original Price | Current Price | LEAPS Price | LEAPS Price | LEAPS Price | Premium Sold | Closing Price | Total Premium | Total Return | Position Delta |
| Vanguard Total Stock Market ETF (VTI) | $189.65 | $192.69 | (open) | (current) | (closed) | ||||||
| 6/15/2022 | LEAPS January 19, 2024 145 call | $54.50 | $56.60 | $2.10 | 85 | ||||||
| 6/15/2022 | July 15, 2022 198 call | $2.50 | $0.03 | $2.47 | |||||||
| 7/14/2022 | August 19, 2022 193 call | $3.20 | $11.00 | ($7.80) | |||||||
| 7/28/2022 | September 16, 2022 210 call | $2.95 | $0.30 | $2.65 | |||||||
| 9/1/2022 | October 21, 2022 205 call | $3.00 | $0.55 | $2.45 | |||||||
| 9/22/2022 | October 21, 2022 197 call | $2.10 | $0.15 | $1.95 | |||||||
| 10/12/2022 | November 18, 2022 190 call | $3.10 | $7.45 | ($4.35) | |||||||
| 11/10/2022 | December 16, 2022 205 call | $2.65 | $0.05 | $2.60 | |||||||
| 12/15/2022 | January 20, 2023 200 call | $3.10 | $1.85 | $3.10 | -28 | ||||||
| Totals | $19.50 | $59.67 | 57 | ||||||||
| Transaction Date | Poor Man’s Covered Calls | Original Price | Current Price | LEAPS Price | LEAPS Price | LEAPS Price | Premium Sold | Closing Price | Total Premium | Total Return | Position Delta |
| iShares 20+ Year Treasury Bond ETF (TLT) | $110.56 | $107.11 | (open) | (current) | (closed) | ||||||
| 6/13/2022 | LEAPS January 19, 2024 85 call | $29.10 | $25.70 | ($3.40) | 80 | ||||||
| 6/13/2022 | July 15, 2022 114 call | $1.65 | $2.58 | ($0.93) | |||||||
| 6/30/2022 | August 19, 2022 119 call | $1.95 | $0.23 | $1.72 | |||||||
| 8/11/2022 | September 16, 2022 119 call | $1.16 | $0.10 | $1.06 | |||||||
| 9/1/2022 | October 21, 2022 115 call | $1.42 | $0.23 | $1.19 | |||||||
| 9/22/2022 | October 21, 2022 110.5 call | $0.73 | $0.03 | $0.70 | |||||||
| 10/12/2022 | November 25, 2022 104.5 call | $1.66 | $0.10 | $1.56 | |||||||
| 11/10/2022 | December 16, 2022 100 call | $1.46 | $2.90 | ($1.44) | |||||||
| 11/22/2022 | December 16, 2022 103.5 call | $1.30 | $3.15 | ($1.85) | |||||||
| 12/2/2022 | January 20, 2023 109 call | $1.82 | $2.02 | $1.82 | -41 | ||||||
| Totals | $13.15 | $29.53 | 39 |
Strategy
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.