Despite some wobbles early in January the S&P 500 closed at a new all-time high on Thursday. And even though the indexes pulled back marginally on Friday, by week’s end the S&P 500 had gained 1.7%, the Dow had rallied 1.83% and the Nasdaq had added 1.53%.

Despite some wobbles early in January the S&P 500 closed at a new all-time high on Thursday. And even though the indexes pulled back marginally on Friday, by week’s end the S&P 500 had gained 1.7%, the Dow had rallied 1.83% and the Nasdaq had added 1.53%.

After a rough few weeks, the market’s recent rally has been welcome, improving the overall evidence ... though not quite yet in a decisive manner, as the intermediate-term trend is mostly neutral (those close to a buy signal) and many stocks are still toying with resistance. That’s descriptive and not predictive, though, so we did do some buying today, though we’re starting small and will look to build if the buyers stay at it.

Tonight’s issue talks about all of our market thoughts and goes over all of our stocks (including some long-time holdings that are perking up), as well as reviewing a couple of industry groups that are showing intriguing strength after tough down periods.

Before we dive into this week’s idea, let’s clean up some of our January positions, with the headliner being things all worked out well.

January is living up to its volatile reputation but there’s no doubt it’s begun to improve—the intermediate-term trend, which was negative for most everything out there, is back to neutral; the broad market is showing some rapid, intriguing improvement; and individual stocks have improved their standing, with some popping to new highs. To be clear, this isn’t a buying panic, but after a few weeks of tedious action that has brought sentiment down, we’re OK with gradually extending your line while remaining nimble. We’ll up our Market Monitor to a level 7 today.

This week’s list is a mixed bag, with everything from growth to turnarounds to commodity names. Our Top Pick looks like one of the leaders of a new group move after being in the doghouse for a couple of years. Try to get in on dips.

Stocks are finally showing signs of life. After a miserable six-week stretch, stocks – with an assist from cooler inflation numbers – appear to be getting in gear. How long the new rally will last may depend on things like Q4 earnings, the early days of Donald Trump’s second term, and what Jerome Powell says next week. But for now, let’s strike while the iron is hot, or at least warm, and add a growth stock whose name you might recognize since so many people use their platform these days. It’s a new recommendation from Cabot Early Opportunities Chief Analyst Tyler Laundon.

Details inside.

The market rose nicely last week as the bond market worries eased. By week’s end the S&P 500 and Nasdaq had rallied 2.9%, and the Dow had gained 3.8%.

The market rose nicely last week as the bond market worries eased. By week’s end the S&P 500 and Nasdaq had rallied 2.9%, and the Dow had gained 3.8%.

In theory, and often as we prefer, in practice, corporate profits drive stock prices.

J.P. Morgan’s (JPM) booming profits are a testament to this, but what’s behind the profits?

It seems that recently, and perhaps even more in 2025, macro issues will drive the direction of markets and sector trends.

Identifying trends and allocating money to the right sectors and picking the leaders in these sectors is increasingly important. Those that follow the Fed and try to predict the direction of interest rates are one example of this macro-oriented strategy.

Our first Issue of 2025 highlights a variety of solid growth names that have been acting well despite the recent dip in the market. As always, this Issue should have something for everyone.

*Note: Your next issue of Cabot Profit Booster will arrive next Wednesday, January 22 due to the market holiday next Monday, January 20 in observance of Martin Luther King, Jr. Day.

Interest rate worries continued to weigh on the market last week as the S&P 500 lost 1.6%, the Dow fell 1.5%, and the Nasdaq declined by 2.3%. This week will have plenty of market-moving events, including the start of earnings season, so expect continued volatility.

The market and some growth stocks held their own around year-end and popped to start the year, but last week was a bad one, with the sellers hitting most everything. There are tons of crosscurrents out there, and we’re starting to see some oversold measures really get stretched, so we’re not hibernating in a bear cave. But the bottom line is that the intermediate-term trend of most indexes, sectors and stocks are down so we continue to favor being cautious. Our Market Monitor now stands at a level 5.

This week’s list has something for everyone, with a lot of good setups for if/when the market does turn up. Our Top Pick has hung in there very well in recent weeks despite the market’s tumble.

In today’s note, we discuss the recent earnings reports from Berkshire Hathaway (BRKB), B2Gold (BTG) and Kopin (KOPN), among others. We’re also making a new addition to the portfolio in the form of YETI Holdings (YETI).

WHAT TO DO NOW: The market’s rebound has been very encouraging, especially when looking at individual growth names—we’re seeing more constructive action now than we were during the narrow advance of June and July, including among all of our holdings. That said, the intermediate-term trend for most everything is still neutral at best (negative for lots of stuff), so the possibility of a partial or full retest still exists. Given our large cash position, we’re going to add half-sized positions tonight in Palantir (PLTR) and Axon Enterprises (AXON), two strong potential leading titles, but we’ll also still hold a 50%-ish cash position as we watch to see how things play out from here. Details below.

With this week’s PPI inflation number (Tuesday morning) coming in lower than expected and the CPI reading (Wednesday morning) coming in as expected, the trend of lower inflation remains intact.

That’s a good thing, unless you have a hankering to buy more Treasuries and have held off.

The 2-year Treasury yield is now below 4%.

Inflation is dead.

OK, it’s not “dead.” But at 2.9% in July, as reported Wednesday morning, it has now (narrowly) reentered the Federal Reserve’s magical 2% realm for the first time in nearly three and a half years – since March 2021. For all the inflation angst during those past three and a half years, the market has fared pretty well overall – the S&P 500 is up 30% since the first CPI print north of 3% was reported in mid-May of 2021. On a per-year basis, that only slightly trails the average annual return in the large-cap index of 9.9% since its inception in 1928.

The cannabis sector has a dream ticket with Kamala Harris and Tim Walz. Investors act like they haven’t even noticed. This seems like a big mistake.

The key takeaway: Cannabis stocks look buyable in the current bout of dramatic sector weakness. Cannabis investors are notoriously bipolar. Right now, they are in a dark mood. That’s usually been the best time to add to positions, especially when there are potential catalysts on the horizon like now. In today’s update, I outline the main ones and the possible timing.

Isn’t this fun? The market gave us whiplash last week. The crash last Monday was the worst day for the market in years. It seemed like the sky was falling. But investors sobered up and the market closed flat for the week.

The tumult of last week was just a noisy road to nowhere. But the market also again showed great vulnerability to negative headlines. And while all that recession talk last week seems to have been clearly overblown, a recession is on the radar now. The market is resilient as usual. But don’t get too comfortable.

In today’s note, we discuss the recent earnings reports from Nokia (NOK) and Newell Brands (NWL), plus 15 other earnings reports from portfolio companies, some of which impacted their standing in the portfolio. Busy week, so let’s get into it.

What a wild couple of weeks.

For two weeks after the June 11 CPI print, small-cap stocks were advancing at such a record pace that they were finally being talked about again in the financial media.

Everything seemed great through the Fed meeting last Wednesday.

Then the wheels came off.

Markets remain on edge after Monday’s big selloff, Tuesday’s recovery, and yesterday’s down day. Some disruptive Explorer stocks were hit rather hard leading to Nio (NIO) being removed from the recommended list today while Super Micro (SMCI) is upgraded to a buy.

On Monday, trading in 401(k)s was more than eight times the daily average, the highest since 2020. My guess is that most of this activity was selling rather than buying.

This is the 13^th bull market in the S&P 500 since 1950. If it ended today, it would tie for the shortest – just over 21 months – with the last bull market, the post-Covid-crash rally that began in March 2020 and tidily peaked at the end of 2021. The average bull market, according to statistics from Ryan Detrick of Carson Investment Research, lasts 65 months.

Does that mean this one can’t up and fizzle right now, taken down by a “carry trade” in Japanese equities, one bad U.S. jobs report, and a whole lot of political (presidential election) and social (war in the Middle East possibly spreading) uncertainty? Of course not. We know a bull market can last only 21 months because we just saw it happen.

Monday was a bloodbath in the market. All three indexes posted massive losses. The Dow was down 2.6%, the S&P fell 3%, and the tech-heavy Nasdaq fell 3.43% on the day. The indexes recovered some of the losses on Tuesday. What can we expect going forward?

A week ago, the main issue with the market seemed to be earnings and if the reports would save or doom the rally. But we have since been completely blindsided by fears of recession.


While earnings have so far not been impressive, the main event has suddenly become recession. Last week, the most recent jobs report was far worse than expected. There were numbers within that report that have reliably portended every recession since the 1970s. As a result, the stock market plunged, and interest rates crashed. The benchmark 10-year Treasury rate moved below 4% and Wall Street has assigned a 95% chance of the Fed cutting the Fed Funds rate by 50 basis points in September.

All-Weather Portfolio Alert (GLD, IEF, VTI, TLT, DBC), Buffett’s Patient Investor Portfolio Alert (AAPL, GOOGL, TXN), Cabot Options Institute Fundamentals – Yale Endowment Portfolio Alert (SPY, EEM, VNQ, TIP, EFA)

Cannabis stocks rallied hard Monday, particularly after the close when we learned that the Florida Supreme Court approved a referendum on legalizing the sale of cannabis for recreational use. Florida already permits medical use, but the change would expand the size of the Florida cannabis market significantly, especially considering Florida’s large tourist industry.

Sell Varonis (VRNS)

Just a quick heads up, I’ll be adding several new positions early next week. We currently have four positions in the portfolio and my immediate goal is to get back up to between six and eight positions using our ladder-based approach for consistent, weekly income.

Dogs of the Dow Portfolio (DOW), Buffett’s Patient Investor Portfolio Alert (GOOGL)

After a surprising gap higher, MMM has continued to follow through with its recent trend higher, with nary a pullback. As a result, we need to buy back our calls and once again extend our deltas back into positive territory.

I’m adding another new bear call spread to the mix and intend on adding several more trades over the coming days.

WHAT TO DO NOW: The market and especially leading stocks are still very choppy, with news-driven moves becoming the norm of late, and today we’re seeing another wave of selling in the names. Big picture, we’re still optimistic, but we’re taking things on a stock-by-stock basis at this point. Today we’re going to sell Shift4 (FOUR), which was hit hard yesterday after saying it received no worthwhile buyout bids and, without any bounce, we’re going to cut bait here, leaving us with 32% in cash. Details below.

I want to lock in a return and look to sell more put premium in XLU over the next few trading days. By locking in a return in XLU, our total returns for Income Trader will exceed 160% for the first time since inception.

Shares of Elastic (ESTC) continue to struggle in the weeks after reporting earnings. We sold part of our position on March 5 for a 30% gain, and we’ll sell the rest today for a roughly 22% gain. SELL REMAINING SHARES

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.

Shares of Cadre (CDRE) were down almost 10% yesterday on news of a secondary offering, which will be priced at 35, roughly the level of yesterday’s closing price. It’s not atypical for a stock like this to absorb a secondary over a week (roughly) then resume its upward march. Additionally, with part of CDRE’s growth strategy revolving around M&A, it’s not too surprising that they would seek to raise capital and do so with equity (strong stock) rather than debt (high cost). Maintaining Buy rating as this offering doesn’t change the big-picture story. BUY

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.