The title sounds counterintuitive. After all, the market has been terrific. And technology stocks, which rarely pay dividends, are leading the charge.

The S&P 500 has spent much of this year making new all-time highs. The index has rallied 27% since late October and 46% from the low in October of 2022. But most of those gains have been driven by the technology sector, which represents an outsized portion of the S&P. Returns for the rest of the market have been rather lame.

It was a strong week for the market following the Federal Reserve meeting. And while some talking heads may say the reason the indexes rallied was the Fed’s moves, or lack thereof, more likely the reason is we are in a bull market.

By week’s end, the S&P 500 gained 1.4%, the Dow rallied 1.6% and the Nasdaq advanced by 1.7%.

There was definitely some churning in the leading areas of the market from early February into last week’s Fed meeting, but there wasn’t much abnormal action, and the past few days have seen the buyers back at it, helping many leading stocks of all stripes pop. Now, we don’t consider the action as a brand-new buy signal, but the major evidence of the market (trends are up for most indexes and sectors) never wavered, so we’re holding most of our winners and looking to increase exposure in names that are enjoying big-volume accumulation. We’ll nudge our Market Monitor up at level 8.

This week’s list is a bit of a hodgepodge, with different types of names from varying sectors. For our Top Pick, we’ll go with a name from a strong sector that has seen its business turn up in a major way while the stock’s recent action looks like a major change in investor perception.

The bull market rolls on, with Jerome Powell and company only adding fuel to the buyers’ fire by affirming their intention to cut interest rates three more times this year. While the artificial intelligence hype cycle has slowed a bit, other sectors are starting to get noticed. One of them is MedTech. So today, we add a once-great MedTech stock that got slashed in half during the bear market of 2022 but has since climbed all the way back to new highs, thanks in part to a new product just approved by the FDA. It was enough to convince Tyler Laundon to add the stock to his Cabot Early Opportunities portfolio, and today we do the same.

The slow and steady approach continues to work in all market environments. We continue to tack on small gains each and every week via laddering. By laddering the expiration cycles of our positions, we have been able to collect income each and every week. This week, we locked in and added 2.3% to our total returns. Doesn’t sound like much to the uninitiated, but for those participating in the strategy our Income Trader portfolio continues to shine with a total return of 161.5%.

And it doesn’t stop there.

As we move into the last few weeks leading up to the next earnings season, it should be no surprise that there is little in the way of earnings announcements this week, or next week for that matter.


Earnings season “officially” begins in just over two weeks. On April 12, several of the big banks (WFC, JPM, C) are due to kick things off. As always, we will look to take on a few trades around that time. Until then, we patiently wait, sitting on our hands, for the earnings calendar to provide us with ample opportunities.

The goal is simple this week. We have two open bear call spread positions at the moment which means our portfolio currently leans to the short side of things. This week, if the market cooperates, I plan to add some long exposure through a debit spread, or a bull put spread, to even out our deltas so our portfolio takes a more neutral stance. There is no doubt that the air is getting thin at these levels. But, as we have seen recently, just when you think the market might take a turn, the bulls make an appearance.

It was a strong week for the market following the Federal Reserve meeting. And while some talking heads may say the reason the indexes rallied was the Fed’s moves, or lack thereof, more likely the reason is we are in a bull market.

It was a strong week for the market following the Federal Reserve meeting. And while some talking heads may say the reason the indexes rallied was the Fed’s moves, or lack thereof, more likely the reason is we are in a bull market.

It was another slippery week for the market as the sector rotation and trader narratives seemed to swing violently day-to-day. By week’s end the S&P 500 and Dow were marginally lower, while the Nasdaq fell 0.76%.

It was another slippery week for the market as the sector rotation and trader narratives seemed to swing violently day-to-day. By week’s end the S&P 500 and Dow were marginally lower, while the Nasdaq fell 0.76%.

Most growth leaders and even the Nasdaq itself has been churning since early February, with a lot of ups and downs but not much price progress—but this week has been more encouraging, as the selling pressures have been unable to persist and the major uptrend may be reasserting itself (basically the opposite situation that was seen repeatedly in 2022-2023). That doesn’t mean it’ll be smooth sailing from here, so we’re still being discerning on the buy side, but we’re holding our winners and remaining in an overall optimistic stance.

In the Model Portfolio, we cut bait on one half position earlier this week that was heading in the wrong direction, but we’re holding our strong performers and tonight are putting a chunk of money to work.

We comment on earnings from Capital One (COF), First Horizon (FHN) and Nokia (NOK). Next week, the deluge starts, with ten companies reporting.

WHAT TO DO NOW: Remain bullish, but be prepared for some near-term (and possibly earnings-induced) gyrations. Today’s sharp drop in the Nasdaq and many leaders is a short-term shot across the bow—combined with some other factors, the odds are growing that we may finally see some selling that lasts for more than a couple of days. That said, the overall environment remains bullish, with higher prices likely down the road. All in all, we’re bullish but are taking things on a stock-by-stock basis and expect some further wobbles in the days ahead. Our only change tonight is that we’re placing Celsius (CELH) on Hold. Our cash position remains around 16%.

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

Aside from AI, a few other big-picture themes came into sharper focus for me this week.

All are positive for small caps.

First, economists and analysts are reducing their recession risk outlooks as the economy continues to hold up reasonably well. That’s good for small caps as they are more economically sensitive than mid and large caps.

This is a short week as we begin the second half of 2023 with inflation down, recession fears fading, and the animal spirits of investors alive and well.

In the first half of 2023, market performance was positive and narrow, largely driven by the big tech names, and especially artificial intelligence (AI) related stocks. The Dow was up 3.8%, the S&P 500 gained 15.9%, and the tech-heavy Nasdaq was up 31.7%. We will continue to explore the world for the best value and growth stocks providing both conservative and aggressive ideas. EVs across the supply chain, resources, and emerging markets remain the focus but we have the flexibility to change course as opportunities arise.

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.

The good year is continuing. The market rally is broadening. And pundits increasingly have positive things to say about the second half of the year.


Artificial intelligence isn’t the only mania capturing the imagination of investors. The soft-landing belief is also widespread. Investors see inflation falling fast, the Fed nearly done hiking rates, and no recession. It looks like we can get through this rate hiking cycle, the steepest in decades, without much economic pain.

This week was a relatively quiet one in terms of our micro-caps, but the market had a good week.

The reason?

The June CPI and PPI readings came in significantly below expectations.

As value/contrarian investors, we have little interest in accepting the market’s wisdom. Some might say that we have little ability to accept the market’s wisdom, which is probably what distinguishes us from other investors (and academics) that accept such guidance.

We’ll quote Warren Buffett, founder and head of Berkshire Hathaway, who wrote in his 1987 letter to shareholders, “Mr. Market is there to serve you, not to guide you.” By this, he means that the stock market’s inability to make accurate predictions should help investors make money. And that these predictions shouldn’t provide guidance on how to invest, given that they are so often wrong.

These are confusing times in the market. It looks like a soft landing for the economy is more likely. But that’s no guarantee. We could still have a recession next year. The bull market could rage on or pull back. Instead of betting on the economic cycle, it’s a time to focus on individual stocks.

Artificial Intelligence (AI) exploded onto the market scene in a huge way in May when semiconductor company Nvidia (NVDA) blew away earnings expectations citing much higher demand for AI chips than anyone expected. It added another leg to the bull market as AI-related stocks soared.

Walmart (WMT) is due to announce earnings Thursday before the opening bell.

WHAT TO DO NOW: The overall market remains mixed, but the under-the-surface action remains a meat grinder, with numerous stocks getting chewed up after making big swings. Today, we’re cutting loose On Holdings (ONON), which had a great Q1 but has nevertheless seen sellers swarm. This will leave us with more than 70% in cash, which is too high given the evidence, so we may have a new addition or two in tomorrow’s issue, though we’ll have to see how it goes given the continued air pockets among potential leaders.

We have one short call position left in May that needs to be rolled, SPY. There is little to no value left in our May 19, 2023, 420 calls, so as a result, I want to buy back our 420 calls and immediately sell more calls. This should help to bring our deltas back in line as well.

Disney (DIS) is due to announce earnings today (Wednesday) after the closing bell.

Disney (DIS) is due to announce earnings today (Wednesday) after the closing bell.

Airbnb (ABNB) and Rivian (RIVN) Report

Expensify (EXFY) reported underwhelming Q1 2023 results after the bell yesterday. Our goal here was to get into what seems like a promising long-term opportunity with a small specialist (expense management and other financial tools for small and very small businesses) before the trends turned more positive.

With 37 days until the June 16, 2023, expiration, I want to lock in another profitable trade today, this time in DIA. We can take well over 50% of the original premium sold for a nice gain.

WHAT TO DO NOW: The story remains the same for the market, which has some positives, but we continue to see wild action among leading stocks, with some doing OK but others hitting air pockets on no news or decent earnings reports. Today, we’re going to have to sell our half-sized stake in Axon (AXON), which reported a fine quarter and opened unchanged but was divebombed today and cracked support. We’ll sell and hold the cash for now.

Intapp (INTA) reported another solid quarter after the closing bell yesterday, sending shares up around 15% today.

It’s time to start selling puts again in GDX. With 11 days left until expiration, our May 19, 2023, 32 puts are worth $0.07. As a result, I want to buy back our puts, lock in some profits and immediately sell more put premium.

I want to add some additional downside exposure; so, with SPY trading for 411, I want to place a short-term bear call spread going out 42 days and outside of the expected range to the upside, or 429.

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.