The markets are reacting to the inflation report, hot off the press. Core CPI was 3.3%, just as economists had predicted. That bodes well for the upcoming Federal Reserve meeting, where most experts forecast another 25-basis-point reduction.

Over the past month, the markets surged following the election but have pulled back in the last few days. While I think we may see some small pullbacks in the next month or so, I’m still bullish but think strategic buys—not dartboard throwing—are the method to boost portfolio returns.

It’s been a great year in the market with the S&P up 27%. And there is good reason for optimism about 2025.

We are in a bull market that began in October of 2022. Bull markets don’t usually run out of gas after just two years, especially recent ones. The Fed has begun a rate-cutting cycle that is likely to last for the next two years. Plus, the economy is solid and expected to get stronger. Rate cuts in a strong economy are unusual, but the combination should be great for stocks.

One sector may have a better 2025 prognosis than the overall market: Financial stocks have been on a tear since the summer. The Financial Select Sector SPDR Fund (XLF) is up 33% YTD and 22% since early August. Despite the recent spike, many financial stocks are still cheap after a decade and a half of underperformance.

Financial stocks are dependent on yield spreads, economic growth, and relaxed regulations. All those areas are improving or expected to improve as a result of the election.

In this issue, I highlight one of the highest-growth companies in an industry that is on the rise. It is the leading all-digital bank in the country. Unlike many other industry-leading stocks, it is still well below the high because of a recent temporary stumble which has likely only delayed its price spike.

It was another interesting week for the market as the Nasdaq rallied 3.3%, while the S&P 500 added 1% and the Dow fell 0.6%. That is quite the performance difference between the Nasdaq and Dow!

From a top-down perspective, the market remains in good shape, but the real action in the past few weeks has concerned leading stocks, and today many hit air pockets, with plenty of short-term abnormal action (and some intermediate-term abnormal action, too). So where do we stand? One day doesn’t mean the party is over, and frankly, we see some stocks that are approaching decent risk/reward entries, but today is a red flag for some names and is a reminder to manage your portfolio (partial profits, respecting stops) and to aim for decent entries. We’re not panicking, but we’ll lower our Market Monitor to a level 7 and see how things go from here.

This week’s list has a nice mix, with some winners that have been resting for a few weeks alongside some names that have recently shown power. Our Top Pick is a name we’ve kept an eye on for a long time and is now beginning to emerge after a tough mid-year stretch.

At a high level, the market is still humming on all cylinders, with the S&P 500 and Nasdaq hovering near all-time highs. But look closer, and some cracks have egun to form, with the Dow down in the last week and some high-flying growth stocks – including several in the Stock of the Week portfolio – getting sold off today. With inflation data to come later this week, it’s possible a pullback of some kind is in order. So today, we add an inflation-proof stock that Clif Droke just wrote extensively about in his Cabot Turnaround Letter advisory.

Details inside.

It was another interesting week for the market as the Nasdaq rallied 3.3%, while the S&P 500 added 1% and the Dow fell 0.6%. That is quite the performance difference between the Nasdaq and Dow!

It was another interesting week for the market as the Nasdaq rallied 3.3%, while the S&P 500 added 1% and the Dow fell 0.6%. That is quite the performance difference between the Nasdaq and Dow!

The market party is on, but someone forgot to tell healthcare stocks.

They’re the only one of the 11 S&P 500 sectors that is actually down in the month since the presidential election. That has everything to do with these five letters: RFK Jr. But are concerns about Trump’s controversial pick to lead the Health and Human Services Department overblown? It appears Wall Street is starting to think so, as the sector has been in steady recovery after an initial sell-off. Still, as a whole, healthcare stocks have been the weakest performers of any major sector this year. And that spells opportunity for value investors.

In today’s issue, we add a big-name, undervalued healthcare stock to our Buy Low Opportunities portfolio. It’s a company whose name you likely know – and that’s showing signs of more consistent profit growth.

Details inside.

Today’s opportunity skews toward the more speculative end of the spectrum, which is part of why I find it so darn enticing.

If you’re interested in a gold miner that also has an angle to help the U.S. produce a critical element, antimony, currently in short supply outside of China, Russia and Tajikistan, none of which are cozying up to the U.S. right now, this is the stock for you.

While we began a position in this stock via yesterday’s Special Bulletin, all the details are inside this month’s Issue.

This was a good week for Explorer stocks, and as we head into the end of the year, Sea Limited (SE) is so far up 190%, IBM (IBM) is up 48% and Dutch Bros (BROS) was up 62% in November alone.

Tariffs are topic one in Washington and the financial media. Markets don’t know how everything will work out. Mexico is America’s largest trading partner, followed by Canada and then China. America still imports 4 million barrels of crude oil a day from Canada, which is also a key partner on the critical minerals front. More than half of America’s imports of fruits and vegetables come from Mexico. Automakers, which have built factories in Mexico to produce vehicles for the American market, are at risk and their stocks are falling at the wrong time.

But there’s one huge (non-Tesla) exception, which we will add to the Explorer portfolio today.

The market continued to inch its way higher in the two weeks since I last wrote. The Stock of the Week portfolio isn’t inching – it’s soaring. Multiple positions in our portfolio were up double-digit percentages in the last couple weeks, with several others hitting new 52-week or all-time highs. As always, it’s a testament to the elite stock-picking ability of our superb analysts. And today, we add another stock, a familiar name that has regained momentum enough to warrant inclusion in last week’s Cabot Top Ten Trader advisory.

Details inside.

The holiday-shortened week yielded more gains for the leading indexes as traders ready themselves for the close of 2024. Here is how our positions performed last week.

The S&P 600 Small Cap Index has drifted a little lower this week but made a nice move over the last month as interest rates declined. The S&P 600 iShares ETF (IJR) is up 7% over the last five weeks.

The chart inside shows how clear the inverse relationship between the IJR (green line) and the 10-year yield (blue line) is.

“Markets are never wrong, only opinions are.” – Jesse Livermore

Few quotes related to investing have stuck with me more than that one.

Jesse Livermore, of course, is an investment legend who, in the early 20^th century, pioneered day trading and who was the basis of the best-selling Edwin Lefevre book, Reminiscences of a Stock Operator – considered by many to be the investing Bible. Many of his words are relevant to today’s market, nearly 85 years after his death. And I think the above quote is as evergreen as any and is important to remember in bull markets like this one.

The market has regained its footing, and here comes Nvidia (NVDA).


All eyes are on the Nvidia earnings report scheduled to come out after the closing bell on Wednesday. It was an Nvidia earnings report two years ago that featured a massive demand for artificial intelligence products and services that sparked the AI craze and ignited a powerful rally in technology stocks.

The market dodged a bullet. And the rally forges on.

After a 5% dip from the high, stocks started climbing again in mid-April and have regained all the losses. Last week’s inflation report had the potential to derail the recent rally. But it didn’t. And the good times are continuing.

In today’s note, we discuss the recent earnings reports from Kopin Corporation (KOPN), Adient (ADNT), and Bayer (BAYRY).


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

We’ve been able to enjoy a break in the earnings action this week (finally), and without a lot of company-specific updates, we’ll keep things short and sweet today.

The main message is that the broad market continues to rise on the back of rate cut expectations and a falling 10-year yield (down to 4.35% from over 4.7% a couple weeks ago).

Major indexes are at all-time highs as data indicated inflation retreated a bit. And many of our positions are soaring.

That includes new addition Neo Performance (NOPMF), whose shares were up 17% during the stock’s first week as an Explorer recommendation as the company reported a swing to profitability. It wasn’t our only holding to post double-digit performance last week.

Details inside.

The market is at all-time highs, the Chiefs beat the 49ers in the most recent Super Bowl, and so-called meme stocks are headed to the moon. Is it January 2021 all over again? Sure feels like it.

Yes, GameStop (GME), AMC Entertainment (AMC) and the like are back, with those and a few others nearly tripling this week. The last time that happened, things didn’t end so well for the meme stocks. Or the market. Should it be a similar red flag for the bull market this time around?

It’s been a good month in the market, so far. The S&P 500 has regained all the dip from April and is now within a whisker of the all-time high. The driving forces have been an improving interest rate story and solid earnings.

With 92% of S&P 500 companies having reported, earnings increased an average of 5.4% over last year’s quarter. But it’s better than that. If you take out the report of Bristol-Myers Squibb (BMY), average earnings growth would be 8.3% for all the other stocks on the index. That’s a strong gain.

The market has regained its footing. After a 5% pullback in the earlier part of April, the S&P 500 has since regained nearly all that was lost, and the index is within bad breath distance of the high.

Earnings have been good. With 92% of S&P 500 companies having reported, earnings increased an average of 5.4% over last year’s quarter. But it’s better than that. If you take out the report of Bristol-Myers Squibb (BMY), average earnings growth would be 8.3% for all the other stocks on the index. That’s a healthy gain.

Viatris (VTRS) reported 1Q 2024 results yesterday, narrowly missing on revenue but coming in line with earnings expectations at 67 cents per share. Sales of older drugs Lipitor and Norvasc declined, with the branded drugs unit’s revenue dropping 4.5% to $2.31 billion. The company has completed its women’s healthcare business divestiture and expects its API unit sale to close soon. Despite the challenges, Viatris reaffirmed its financial guidance for the year, projecting total revenue between $15.5 billion and $16.0 billion, with adjusted EBITDA estimated at $5.0 billion to $5.4 billion. The company remains focused on debt reduction, having paid down $546 million during the quarter.

WHAT TO DO NOW: Do a little buying. The market’s evidence has improved over the past couple of weeks, with our Cabot Tides on the verge of a green light and our Two-Second Indicator having flashed an all-clear. Even so, growth measures (Aggression Index, Growth Tides) are still broadly neutral, while earnings season has been tricky for individual stocks. Put it together and we’re doing a little buying tonight but starting slow: In the Model Portfolio, we’re adding a half-sized stake (5% position) in TransMedics (TMDX) and adding a 3% position in Cava Group (CAVA), leaving us with around 36% in cash. We’re also placing Pulte (PHM) back on Buy. Details below.

Cannabis stocks are up sharply – 20% or more – since I suggested buying them on weakness in a Cabot Cannabis Investor update sent to you on January 10.

Using my two favorite exchange-traded funds (ETFs) as proxies for the sector, the AdvisorShares Pure US Cannabis (MSOS) has advanced 20%, and AdvisorShares MSOS 2X Daily (MSOX) is up 37%.

WHAT TO DO NOW: Most of the evidence is still bullish, both for the overall market and for leading stocks, but as the January wobbles have continued, some air pockets are emerging, with today being a tough day for growth stocks. Today we’re going to sell half of Duolingo (DUOL), which is breaking support and has given back its post-earnings gains, while placing our half-sized stake of ProShares Russell 2000 Fund (UWM) on Hold. Our cash position will be around 26%.

Volatility popped a bit today and even though I would like it to be slightly higher, I’m going with a high-probability iron condor to bring in a bit of income. Hopefully, we continue to see volatility, as seen through the VIX, push above 15. If so, more trading opportunities should present themselves.

I will be exiting our JPMorgan Chase (JPM) trade today. I will discuss the trade in greater detail in our upcoming weekly issue.

Okay, everyone, earnings season is finally upon us. I suspect we are in for an interesting earnings season, and to get us started, I will be holding a subscriber-only webinar tomorrow at 12 p.m. ET.

There is little to no value left in our XLU January 19, 2024, 61 puts. As a result, I’m going to buy them back, lock in some nice profits and immediately sell more premium. I’ll be doing the same in a few other positions as we move throughout the rest of the week.

With just over one week left until expiration, and some potential short-term market-moving info ahead of us (CPI, earnings) I’m going to go ahead and do the prudent thing by taking our SPY bear call spread off the table.

Okay, now that we have initiated all the Small Dogs positions, I’m going to place trades on the remaining five Dogs of the Dow positions.

The Dogs of the Dow is an investment strategy that involves investing in the top ten Dow Jones Industrial Average stocks with the highest dividend yields. The theory behind the investment strategy is that the highest-yielding stocks have most likely lagged the market and as a result, are undervalued and due to outperform in the year ahead.

WHAT TO DO NOW: Remain bullish, but take action where needed. The market (and especially growth stocks) have taken a beating in the first two days of the year—there are reasons to believe this is partly due to seasonal shenanigans, so we’re not overreacting, but we’re also not holding and hoping. In the Model Portfolio, we’ll sell half of DraftKings (DKNG), which is our weakest stock, and place Duolingo (DUOL) on Hold, leaving us with around 25% in cash. We do see some potential buys setting up, but we’ll hold the cash for now and see if growth stocks (and the market) can find support.

We started the process of closing out a few of our Dogs and Small Dogs of the Dow positions last week and will close the remaining over the next day or so. Once that is complete, we simply wait until the first week of 2024 to initiate our new Dogs and Small Dogs positions (and several others across various portfolios).

Okay, it’s that time of year. We are going to close out a few of our Dogs and Small Dogs of the Dow positions today and early next week. Once that is complete, we simply wait until the first week of 2024 to initiate our new Dogs and Small Dogs positions (and several others across various portfolios).

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.