Explorer stocks had a good week led by Super Micro (SMCI) up 20% and Cloudflare (NET), up 9%, as PayPal (PYPL) has struggled a bit as it launches a new, higher-margin digital ad business. The S&P 500 is up 14% so far this year but the 10 biggest stocks recently represented almost 37% of the index’s total value, the highest since September 2000, according to FactSet. Use caution and take partial profits if you have some of these in your portfolio.

We have been discussing some great companies and breakthrough technologies, but it is easy to overlook that energy is the foundation of economic and technological development. It is also at the core of how countries secure and project national power.

So today, we add a U.S. renewable energy company that is a leader in an alternative energy source that’s making a comeback.

Despite some troubling signs under the surface of the market, mega-cap tech once again led the indexes’ charge higher. And because of the heavy weighting of these tech stocks in the S&P 500 and Nasdaq, those indexes gained 1.8% and 3.75%, respectively, while the Dow fell 0.4% on the week.

On the one hand, there are still a decent number of stocks that act well and are generally advancing, but on the other hand, more and more names across a variety of areas are hitting air pockets or simply falling by the wayside. To us, the divergence tells us the risk of a big character change is elevated, and that’s why we continue to advise holding a decent chunk of cash—but with plenty of stocks still acting well, we’re also OK with selective buying in names that are under strong accumulation. We’ll again leave our Market Monitor at a level 7, though we remain flexible and will adjust exposure if need be.

This week’s list is another eclectic one, with an increasing number of turnaround-type stories. Our Top Pick is a bigger outfit that’s very cheap but is starting to see some AI benefits—and the stock has shown exceptional power of late.

Stocks keep rising to new highs, though only a handful of sectors are truly participating in the rally. That will need to change if the market is to sustain its recent momentum, but for now, we’ll go with the tides and lean into one of the new-age subsectors that’s been attracting major sponsorship: GLP-1, a.k.a. weight-loss drugs. They’re all the rage these days and have driven portfolio holdings Eli Lilly (LLY) and Novo Nordisk (NVO) to great heights. And today, we add a more under-the-radar, indirect play on the trend in the form of a mid-cap health food upstart that was recently recommended by Tyler Laundon to his Cabot Early Opportunities audience.

Details inside.

Markets have been sideways in the past month, affected by wars, upcoming elections, and analysts see-sawing on the possibility of a Fed rate reduction. The Federal Reserve is meeting this week, and predictions for a rate cut this year are all over the board: none, one, or two.

I expect we’ll have more volatility as we near the fall election cycle.

In the meantime, economic stats look good! Manufacturing continues to climb, jobs are still being added at a rapid pace (272,000 vs. the estimate of 190,000), and the unemployment rate—at 3.9%—remains steady.

The market remains a mixed bag, with some big-cap indexes moving up, but just about everything else still stuck in a trading range, while leading growth stocks remain hit or miss. That said, there are some encouraging signs, including some fresher leadership and resilient action among a bunch of names we’re watching and own, so we continue to play things in the middle--we’re holding some strong names and actually averaging up on one of our stocks tonight, but we’re also holding a chunk of cash and being selective.

Despite some selling pressures early last week, the indexes rebounded nicely on nearly every small dip, and by week’s end the S&P 500 had gained 1%, the Dow was mostly unchanged, and the Nasdaq had risen by 1.8%.

Despite some selling pressures early last week, the indexes rebounded nicely on nearly every small dip, and by week’s end the S&P 500 had gained 1%, the Dow was mostly unchanged, and the Nasdaq had risen by 1.8%.

The market has been terrific. And it will probably finish the year higher than it is now. But there is reason for caution.

Because of sticky inflation, interest rates remain near the highest levels in 20 years and may continue to stay high or go higher, until they drive the economy down. A hugely contentious presidential election is about to take place. And there are two significant global wars going on.

Steep selloffs are common even in markets that rise over time. The S&P 500 doubled over the last five years. But it crashed 30% in record time at the onset of the pandemic in 2020. There was also a bear market in 2022 during which the S&P fell over 20% and the Nasdaq plunged well over 30%. Of course, most stocks were down a lot more than the indexes. If you targeted some of the very best stocks at fire sale prices you could have gotten amazing returns.

In this issue, I highlight a way to target the purchase of the very best stocks at fire sale prices amid market turmoil that may occur from the potentially market-roiling issues this year or next. Most investors don’t buy when the market is crashing because it’s natural not to want to try and catch a falling knife. But there’s a way to take emotion out of the equation and calmly plot a way to fantastic returns.

Despite some selling pressures early last week, the indexes rebounded nicely on nearly every small dip, and by week’s end the S&P 500 had gained 1%, the Dow was mostly unchanged, and the Nasdaq had risen by 1.8%.

It’s now been a couple of months since the market’s April low, but instead of a firm uptrend that’s telling you big investors are diving in or adding to positions, we’re seeing lots of split action. Whether this is a fresh launching pad for most stocks or near-term toppy action that will lead to a summer slump is anyone’s guess—right now, we’re just following along with the evidence, which means holding and targeting stocks that are fresher and under accumulation, raising stops and dumping names that crack and holding a chunk of cash given the sloppiness seen in the broad market. We’ll leave our Market Monitor at a level 7, but once again, it’s mostly about what you own.

From solar to chips to biotech to aerospace, this week’s list is another that has something for everyone. Our Top Pick is a turnaround-type chip player whose stock has decisively blasted off in late April as business is set to turn up.

It’s another week of inflation data, Fed speak and interest rate angst, but you shouldn’t let any of it influence what stocks you’re buying and selling. Stock of the Week is a long-term stock portfolio, and one week of parsing CPI data and Jerome Powell’s words isn’t going to alter the trajectory of your best stocks. Meanwhile, the major indexes are at all-time highs, despite some under-the-surface churn. So today, we take a big swing in the form of a small-cap, Canadian-based rare earths company that’s been in Carl Delfeld’s Cabot Explorer portfolio for months.

Details inside.

Things have been rough in the MedTech world lately.

The new class of weight loss drugs (GLP-1s) is shaking things up way more than expected. And rather than think things through it appears that larger investors have decided to take down their exposure to MedTech now and ask questions later.

Just take a look at the iShares Medical Device ETF (IHI). It has fallen from 58 in late July to under 46 today, a greater than 20% decline.

This was an encouraging week for Explorer stocks with almost all making gains and Novo Nordisk (NVO) shares up 10%. Chile’s lithium and food fertilizer play, Sociedad Química y Minera de Chile S.A. (SQM), also got off to a nice start in its first week as an Explorer recommendation.

And today, we get into America’s decline as a food superpower - and reveal which emerging market is filling the void.

Cannabis stocks have retreated from recent highs in the rally sparked by news that the government may reschedule marijuana under the Controlled Substances Act.

Retraces are perfectly normal after big moves. Many traders typically expect a 33% give-back.

The key question is whether the pullback is buyable. I say yes, for two reasons – one fundamental (catalysts, below) and one technical. Let’s start with the technical factor.

Third-quarter earnings season is only days away. PepsiCo (PEP) will kick off the season on Tuesday, October 10. The “official” start is generally considered to be on Friday, October 13, when major financials like recommended stock Citigroup (C), as well as JPMorgan (JPM), Wells Fargo & Company (WFC) and Blackrock (BLK) report their results. For the S&P 500 members, Tuesdays, Wednesdays, and Thursdays are the busiest, as 20-50 companies report on each of those days. While weekends are almost cleanly bereft of reports, Berkshire Hathaway (BRK/B) provides a stand-out exception (estimated to report on November 4).

The market was already struggling after the Fed’s “higher for longer” comment about interest rates. Now it’s getting hit with ugly headlines regarding the situation in Israel.

Geopolitical risks are always out there, and they act up occasionally. Hopefully, this new Middle East situation won’t expand into a wider conflict. There is also the Ukraine conflict. These are risks that could develop into a much bigger problem. Even if they don’t, there is still the interest rate and inflation situation.

This market is officially flirting with ugly. The S&P is now down about 7% from the 52-week high and not far from correction territory, down 10% from the high.

The selling intensified over the last week after the Fed struck an unexpectedly hawkish tone at last week’s meeting. The gist of the Fed’s message is that rates may well go higher and will stay higher for longer. The statement pours cold water on the notion that rates will be cut in the near future and reinforces the realization that higher rates are here to stay.

Even the temporarily averted government shutdown can’t do much for this market. The S&P 500 is now down more than 7% from the 52-week high and may be headed to correction territory, down 10% or more.

The main problem is high interest rates. The benchmark ten-year Treasury rate continues to rise and just hit a new 16-year high near 4.7%. The Fed’s recent statement that interest rates will remain higher for longer continues to demoralize investors.

There were no earnings this past week, but earnings season is just around the corner. The beleaguered Walgreens Boots Alliance (WBA), without a permanent CEO, kicks off our season with its Thursday, October 12 report, followed the next day by Wells Fargo (WFC) and Citigroup (C).

WHAT TO DO NOW: Remain cautious, as there’s not much change with our indicators or stance—the intermediate-term trend of most stocks, sectors and indexes is down, and while sentiment is very bearish and a decent number of growth stocks are holding well, it’s best to stay close to shore until the buyers return. Yesterday, we sold one-third of our remaining position in ProShares S&P 500 Fund (SSO) and are now holding about 55% in cash.

The market has been on edge since the Fed’s hawkish tone and updated Summary of Economic Projections (SEP) last week. But if we can get oil and interest rates to back off a little and some stock-specific catalysts during the upcoming Q3 earnings season maybe we can finally take our macroeconomist hats off and get back to doing what we’d rather do. Which is talk about some of the great small growth stories out there!

The market and most Explorer positions struggled a bit this week except Conoco (COP), which is benefitting from crude oil hitting 2023 highs. Consumers and businesses are looking forward to the Fed ending interest rate increases as the inflation fight continues. Food inflation slowed to about 3% year-over-year in August, down from a troubling 13% a year earlier. Those topics, plus Japan, China and the electric vehicle arms race, in today’s Cabot Explorer update.

While the S&P 500, Nasdaq 100 and Russell 200 are down on the day, the Dow is up on the day. As a result, our Dogs and Small Dogs portfolios are benefitting greatly, as seven out of the ten positions are up on the day.


We still have a few July positions to roll forward and several underlying stocks that have recently pushed above their short call strikes. So, the plan is to buy back our short calls, where needed, and immediately sell more premium. I’m going to start today with AMGN which is one of the few positions with July 21, 2023, calls.

I will be exiting the International Business Machines (IBM) trade today. I will discuss the trade in greater detail in our subscriber-exclusive webinar at noon ET tomorrow, July 21.

Sell Terex (TEX)

We jumped into TEX four months ago on March 3, literally just a few days before the stock took a dive that ended up sending it 30% lower over the next few weeks. We held on and those of you that added shares along the way should have a much better return than the roughly 7% gain showing in our official portfolio. With so many growthier stocks acting well and TEX up over 50% from its April lows, I’m going to take the modest gain and boot it from our portfolio today. To be clear, I don’t hate TEX and think the bullish thesis I presented back in March still holds true. That said, the reality is there are just too many other stocks with better upside potential right now and I want to maintain concentration in those while taking down our market exposure ever so slightly through next week’s Fed meeting (our next Issue is due out in two weeks). SELL

Remember, as is always the case, risk management is the key to long-term success when using high-probability option strategies. It’s the only way to truly allow the law of large numbers to work in your favor. Don’t get greedy and enamored by the quick nature of these trades. Stay disciplined!

With the July 21, 2023, expiration cycle coming to a close in nine days, it’s time to start buying back our short calls and selling more premium going out 30 to 60 days. I’ll be sending out numerous trade alerts for the various portfolios over the next few days, including the potential for a few more new trades in our active portfolios.

With the July Issue of Cabot Early Opportunities coming out this Wednesday and the market acting extremely strong, we’re going to be opportunistic and lock in a few modest gains today.

With the July 21, 2023, expiration cycle coming to a close in nine days, it’s time to start buying back our short calls and selling more premium going out 30 to 60 days. I’ll be sending out numerous trade alerts for the various portfolios over the next few days, including the potential for a few more new trades in our active portfolios.

With the July 21, 2023, expiration cycle coming to a close in nine days, it’s time to start buying back our short calls and selling more premium going out 30 to 60 days. I’ll be sending out numerous trade alerts for the various portfolios over the next few days, including the potential for a few more new trades in our active portfolios.

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. Click here to sign-up. No worries if you can’t make it, we archive everything here at Cabot. You can find all the archived recordings here.

With the July 21, 2023, expiration cycle coming to a close in nine days, it’s time to start buying back our short calls and selling more premium going out 30 to 60 days. I’ll be sending out numerous trade alerts for the various portfolios over the next few days, including the potential for a few more new trades in our active portfolios.

With the July 21, 2023, expiration cycle coming to a close in nine days, it’s time to start buying back our short calls and selling more premium going out 30 to 60 days. I’ll be sending out numerous trade alerts for the various portfolios over the next few days, including the potential for a few more new trades in our active 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.