Despite plenty to worry about in the market including the rising tensions in the Middle East and the short-lived port strike, impressively the S&P 500, Dow and Nasdaq all rose marginally last week.

Despite plenty to worry about in the market including the rising tensions in the Middle East and the short-lived port strike, impressively the S&P 500, Dow and Nasdaq all rose marginally last week.

Surging data center demand. Electric vehicles. Heat pump HVAC systems. Severe weather events. Hurricanes. Rising sea levels. North Carolina flooding.

This is just a short list of the drivers behind rising electricity demand, the harsh realities of being behind the curve when it comes to global warming, and the resulting push toward energy efficiency and greenhouse gas emission reductions.

Today’s portfolio addition is a small and still-unknown company that helps solve these challenges, moving the country toward a more sustainable, clean-energy future.

I think you’ll find it interesting.

The market remains positive, but not powerful, with a lot of growth stocks and especially growth indexes and funds still batting with months-old resistance. Big picture, we think the next major move is up and a lot of the leadership of any coming run has already declared itself; indeed, we think we own some of the best names out there. But we’re not pushing the envelope here, as the market continues to deal with uncertainties (including this week’s Middle East tensions and dockworkers strike). We have no changes again tonight, though we’re staying flexible and are looking to add exposure as opportunities arise.

Between the expansion of the war in the Middle East, a U.S. dockworker strike that could slow the supply chain again, and the uncertainty of a too-close-to-call presidential election next month, there are a lot of headwinds out there serving to counterbalance the good vibes created by last month’s Fed rate cut. Add in the fact that we’re in the traditional “spooky season” of October – the month in which the market has bottomed in each of the last four years – and it’s a good time to add some security to your portfolio.

So today we do just that … by adding a well-known home security company to our Buy Low Opportunities Portfolio. It’s been in business for a century and a half but has only been a public company for the past seven years. And with profits accelerating, the stock has become cheap.

Details inside.

It was a mostly quiet week for the market, which isn’t terribly surprising as traders have moved past the Federal Reserve event and have turned their attention toward the election. By week’s end the S&P 500 had gained 0.4%, the Dow had rallied 0.5% and the Nasdaq had fallen 0.55%

Just looking at the headline evidence, it remains in good shape—the intermediate-term (and longer-term) trend of the indexes is up, and the same can be said for most growth measures. The only “problem” is that the action, while positive, isn’t very powerful: Some indexes that are technically trending up are still battling with resistance and haven’t made much progress for many weeks or months, and the same can be said for a lot of individual stocks, including some formerly leading areas (like chip stocks) that continue to lag. Thus, we’re sticking with our current stance—leaning bullish for sure, but picking our spots and stocks carefully and not rushing into things. We’ll again leave our Market Monitor at a level 7 tonight.

This week’s list is well-rounded, though for our Top Pick, we’ll go with a super-strong name that looks like one of the leaders of a potential group move.

Stocks cooled off this past week, though they mostly held their gains, which is not a bad way to close out an unusually productive September. Investors can likely thank the Fed for that. But many potential landmines (presidential election, escalating tensions in the Middle East, another jobs report this week) loom, so we’ll see how things go as we enter an uncertain October.

Given all the uncertainty, today we add a large-cap value stock that I recently recommended in my Cabot Value Investor portfolio. It’s one of the largest banks in America, and it’s potentially on the cusp of getting much bigger. Last year, it caught the attention of Warren Buffett. And so far, his bet on it appears to be paying off – with more upside ahead.

Details inside.

It was a mostly quiet week for the market, which isn’t terribly surprising as traders have moved past the Federal Reserve event and inch towards the election. By week’s end the S&P 500 had gained 0.4%, the Dow had rallied 0.5% and the Nasdaq had fallen 0.55%.

It was a mostly quiet week for the market, which isn’t terribly surprising as traders have moved past the Federal Reserve event and inch towards the election. By week’s end the S&P 500 had gained 0.4%, the Dow had rallied 0.5% and the Nasdaq had fallen 0.55%.

The MSCI World Index now has a remarkable 72% market value weighting in U.S. stocks.

In other words, 72% of the market value of stocks trading around the world represent companies headquartered in America.

This begs the question: Should investors be this concentrated in a single market?

Cannabis investors remain in a depressed state, despite several potentially bullish developments that could move stocks in the sector up significantly over the next year.

The market has had a good year so far. The rally that began at the end of October is still in force. But things are getting wobbly.


Last week’s inflation number came in higher than expected. CPI was 3.1% for January and that’s down a lot from the high of 9.1% in June of 2022. But it’s still above the Fed’s target rate of 2%. And inflation has stopped going down even with interest rates at the highest level in decades. That’s a problem.

In what has been a basically good market this year, investors just got a dose of bad news. Inflation isn’t going down enough, even with the current high rates. That makes the rate cut “Holy Grail” far less likely anytime soon.

The Fed will have to at least keep interest rates at a very high level to prevent inflation from reigniting. But at some point, the Fed will need to lower interest rates in order to keep the recovery alive. But they can’t, at least to an impactful degree. Historically, inflation tends to come right back when the Fed takes its foot off the gas.

As the stock market soars ever higher, driven in no small part by the Magnificent Seven mega-cap tech stocks, vitriol again is being heaped upon passive investing. This form of investing, more commonly known as indexing, is considered “passive” because it considers no other traits beyond a stock’s weight in an index. There is no work involved in picking such stocks or setting the weighting – the index passively determines these. The opposite, of course, is “active” investing, in which investors work to select which stocks, and how much, to buy and sell. Active investing can involve a lot of activity.

This week, we review earnings reports from Agnico Eagle Mines (AEM), Goodyear Tire & Rubber (GT) and TreeHouse Foods (THS).

Next week, we anticipate earnings from Elanco Animal Health (ELAN), Macy’s (M), Gannett (GCI), Dril-Quip (DRQ), Vodafone (VOD) and Warner Bros Discovery (WBD).

Cabot Options Institute Quant Trader is focused exclusively on creating consistent returns using high-probability options strategies including bear call spreads, bull put spreads, iron condors and more. Whether you have questions about the strategies, or even about setting up your account, or how to make your own trades, Andy will answer all of your questions

Small caps have had a volatile week, which we can blame on the CPI inflation report (Tuesday) and subsequent move in interest rates. That all said, if you just woke up from a two-week nap you wouldn’t notice much at all at the small-cap index level. It’s actually a touch higher than it was on January 30 and currently challenging the levels seen last Friday (pre-CPI report).

That’s all a long-winded way of saying the market has digested the CPI report and determined (for now) that one slightly-higher-than-expected reading doesn’t make a trend. It’s helped that a few Fed officials have said the same.

Cabot Options Institute Income Trader is focused exclusively on the creating consistent income through a variety of options selling strategies. Whether you have questions about selling puts, covered strangles, jade lizards or our income wheel approach, Andy is more than happy to help you steepen your learning curve in this live event.

It sounds heartless to say, but successful investing is largely about exploiting the emotions of others.

The two biggest emotions to exploit in the market are obviously fear and greed. When investors are too fearful, it pays to exploit that emotion by betting the other way. And vice versa for greed.

Another common emotion to exploit is impatience.

WHAT TO DO NOW: Hold your strong stocks, but near-term, it’s OK to sit on your hands a bit and see how things shake out. The overall evidence remains bullish, but there have been some yellow flags of late and yesterday’s broad, sharp decline is likely to have some near-term reverberations. We took partial profits in Arista (ANET) yesterday, selling one-third of our shares, and placed Pulte (PHM) on Hold, leaving us with around 33% in cash—and some great performers. We’ll stand pat tonight, though if things settle down for a couple of days, we could put some of our cash back to work.

The market looks strong right now. The S&P 500 just made a new all-time high in a young bull market and the index is up 5.38% in just the first five weeks of this year.

Inflation is way down. The Fed is done hiking rates. The economy is still strong. And earnings are solid. That’s a good macroeconomic background for stocks. But how long will this good news last?

The world of major pharmaceutical stocks can be split into two camps: winners and laggards. Eli Lilly (LLY) is a clear winner, with its successful roll-outs of new treatments led by the immense promise of weight-control drugs like Mounjaro and Zepbound. Lilly’s shares have surged 545% (up 5.5x) in the past five years and are increasingly mentioned as a replacement for Tesla in the “Magnificent Seven.” The shares trade at 47x estimated 2024 EBITDA.

Well, we’ve seen five straight days of positive gains to the tune of 6%. While this may have helped all of our delta-positive poor man’s covered call positions in the Fundamentals service, the push higher wasn’t as kind to negative delta positions.

ATI, SHOP, DT Report

RELY and RCM Report

Well, there is no doubt that our SPY November 17, 2023, position has been a wild ride. We decided to leg into this one by selling the SPY November 17, 2023, 452/457 bear call spread. Several days after the market presented us the opportunity to leg into the other side of our iron condor. We sold the SPY November 17, 2023, 408/403 bull put spread. In total, we were able to bring in $1.32 worth of premium for our SPY November iron condor.

Repligen (RGEN) Beats in Q3

I want to sell a bear call spread in SPY going out to the November 17, 2023, expiration cycle. This is more of a protective play just in case we see a continuation of the current trend over the next week or so. By adding a bear call spread we are able to bring our deltas closer to a neutral state.

We sold a SPY November 17, 2023, bear call spread in late September for $0.74. It’s now worth roughly $0.03. A week later we initiated a SPY November 17, 2023, bull put spread for $0.58, essentially legging-in to an iron condor.

We have a couple positions with calls due to expire today, so let’s get ahead of it and buy back our short calls and immediately sell more calls to collect another round of premium.

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.