As we plow into March, the overall story remains mostly the same for the market—the primary evidence remains strong, with the trends of the major indexes up, most leading stocks in good shape and with hundreds of stocks hitting new highs. That’s the main focus, of course, but not to be ignored is the near-term froth seen in many names and the fact that few leaders are at high-odds entry points, extended above moving averages and having been on the run for months. Thus, our advice is unchanged: We’re riding winners higher, but are picking our spots on the buy side, aiming to find earlier-stage stocks. We’ll again leave our Market Monitor at a level 7.

This week’s list has many stocks that have emerged in recent weeks that seem worth a shot, especially if we see a normal retreat in the market. Our Top Pick has a great story and has transformed into a well-sponsored name (nearly 1,500 funds own shares!) as it’s the clear leader in a unique sector.

The party continues on Wall Street, and we’re not going to forecast when it will end. Instead, we’re going to try and capitalize on the strength, a strategy that has worked very well for the Stock of the Week portfolio over the last four months. Today, we take another big swing in a stock that was a home run for Cabot Explorer Chief Analyst Carl Delfeld several years ago, before the sellers came for it. Now, it’s back. It’s an overseas stock that doesn’t have the China stench on it, something that hurt other perfectly good stocks (see BYD (BYDDY)) in the last year.

The S&P 500 is roughly 24% higher without a 2% decline. So, the air is starting to get thin at these price levels. In addition, the rally, without a 2% pullback, has lasted for 88 days. This puts the current bullish streak in the top 25 all-time and top 3 in terms of returns since 1928. The largest move without a 2% decline came in 1994, when the S&P rallied 26.3%.

It can’t be argued that we are witnessing something well outside of normal distribution.

I plan on locking in returns on several of our current positions and immediately selling more premium. In addition, I plan to add at least one more stock to the portfolio, which will bring our total to seven stocks. I also intend on continuing to ladder our positions in perpetuity, so we are collecting premium on a weekly basis. As it stands, we have positions due to expire over the next four consecutive weeks.

Other than that, there really isn’t much to say at the moment. We continue to be pleased with the overall mechanics of our approach and more importantly the overall return, which currently stands at 145.7%.

Earnings season is mostly behind us, but there are a few stragglers yet to report on the calendar. Target is on the agenda this week. With a decent IV rank (58.9) and the ability to create a fairly large range outside of the established expected range, Target (TGT) looks like a potential trading opportunity.

The company is due to report prior to the opening bell Tuesday, so if we decide to place a trade look for an alert around mid-day today.

You may have noticed that last week when Nvidia (NDVA) announced its earnings, its stock rose 16% while Explorer recommendation Super Micro Computer (SMCI) went up 32%.

This is consistent with my view that Super Micro is a leveraged bet on artificial intelligence (AI), and I expect this will also be the case when Nvidia’s stock price moves the other way. Nvidia is now priced at an incredible 32 times trailing annual sales and has a larger market cap than Germany’s entire blue-chip DAX index. Super Micro has already tripled in 2024 so consider taking partial profits. Remember, J.P. Morgan allegedly stated that he made his greatest profits by selling too soon.

In my last update on February 14, I suggested cannabis stocks had fallen enough to be buyable ahead of the expected rescheduling catalyst. That was an opportune entry point.

As of the close February 23, the AdvisorShares Pure U.S. Cannabis (MSOS) and the leveraged version, AdvisorShares MSOS 2X Daily (MSOX), were up 12% and 20%, respectively.

Then investors got impatient again with the lack of progress on catalysts. As of the close February 27, 2024, volatile cannabis stocks had given back most of these gains. The MSOS was up 2.4% and the MSOX was up 1.7%. I think cannabis stocks have weakened enough to consider adding again (more on this below).

The Goldilocks scenario of falling inflation and a still-strong economy is unlikely to last. Interest rates will have to come down before long or the recession that the market is dismissing might be just a little further down the road. But recent higher-than-expected inflation is making lower rates less likely.

Sure, the rally could last for a while. The economy always seems to be more resilient than people expect. But the circumstances behind the rally since October are unlikely to last. This environment will change. For that reason, it doesn’t make sense to chase stocks that have been working so far this year. It’s better to position ahead of a new dynamic that is likely coming.

Change creates opportunity. There are many great income stocks that are not benefiting from this rally. Yet these stocks are selling at historically very cheap valuations with high yields. These stocks also can thrive in a slowing economy. In this issue, I highlight two stocks in particular that are cheap and high-yielding ahead of a period of likely market outperformance.

Despite some heavy selling pressures early last week, the market rallied to close the week following Nvidia’s (NVDA) blowout earnings report that highlighted the growth potential of AI. By week’s end the S&P 500 had gained 1.2%, while the Dow rose marginally and the Nasdaq fell slightly.

One tool that we’ve long used is, after a big move (either up or down), if the market starts to get very volatile, it’s often a sign that the buyers and sellers are fighting it out—and could lead to a character change. That said, we’re mentioning that more as a heads up than as any major red flag—at day’s end, the trends of the major indexes and most leading stocks are up, and it’s possible that Nvidia’s (NVDA) quarterly report cleared the air last week. All told, we’re bullish but we also think the odds favor more tricky trading going ahead. We’ll leave our Market Monitor at a level 7 while keeping a close eye on the post-NVDA action.

This week’s list has some tech leaders, but it also has more than a few names outside of the AI field, both smaller and larger. For our Top Pick, we’re going with a liquid leader where we think investor perception has a lot farther to run on the upside.

The market is hitting new highs, thanks to Nvidia (NVDA). And while blowout earnings from the artificial intelligence leader were good for the many AI-related plays we have in the Stock of the Week portfolio, we have more than our share of non-AI stocks that are thriving as well (see American Eagle Outfitters (AEO) and Aviva (AVVIY)). Today, however, we add a hiding-in-plain-sight all-star, a company so mainstream and obvious that it may already be in your portfolio … or it’s possible you sold out of it along with many other institutional investors during a brutal stretch in 2022. Now, it’s fully back – and yet the shares still trade well below their 2021 peak. It’s a new recommendation from Tyler Laundon in his Cabot Early Opportunities advisory.

Details inside.

We finally locked in a profit last week in our QQQ bear call spread … and it looked like a similar fate was not far off for our SPY iron condor. That is until NVDA reported earnings and the market rocketed higher shortly after the announcement. The push higher in the S&P 500 led to SPY piercing our short call strike of 505. The spread is now worth $2.87. Given the near-term overbought readings and numerous short-term bearish indicators flashing red, I will continue to hold the position, but plan to exit if our spread hits $3.16.

I’ll be adding several more positions to the mix this week. Stay tuned!

This past week, none of our companies reported earnings and there were no ratings changes. Shares of ESAB Corp (ESAB) are approaching our 68 price target, so we continue our review of this recommendation. The next earnings report is from Walgreens Boots Alliance (WBA), scheduled for June 27.

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

The big news this week was, of course, that the FOMC decided to pause and not hike interest rates at the June meeting. But as expected they suggested that a couple more 25-basis point hikes are in the cards throughout the rest of the year.


It feels like this “we want to keep you guessing” messaging is partly due to wanting to see how more data comes in and partly to keep investor expectations in check. The latter seems especially relevant given the S&P 500 just moved into a new bull market and AI enthusiasm has pushed a number of the MegaCap stocks to new highs.

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.

Cannabis stocks are about to make a big move over the next several weeks. This is a good trading opportunity.

What is going to send the group higher?

The Senate should take significant steps to advance key bank sector reform that would help cannabis companies, say lobbyists.

In baseball, on an infield hit with a runner on third base, the fielder will look directly at the runner before throwing the ball to first base for a sure out. This “look” prevents any attempt by the runner to score – if he takes off for home plate, the fielder will throw him out.

It’s a new bull market! The S&P 500 has rallied over 20% from the low, the technical definition of a bull market. The index is also up about 12% YTD. Are stocks topping out or are we off to the races? Despite inflation, the Fed, and increasing forecasts of recession, stocks have defied conventional wisdom and rallied strongly. That’s impressive. But this rally is incredibly thin. Ten primarily large technology company stocks are responsible for all of the index gains YTD. The other 490 stocks have collectively gone nowhere.

We are moving shares of Molson Coors Beverage Company (TAP) from Buy to Sell. The shares are approaching our 69 price target, with only about 4% upside remaining. This is close enough, given that much of the run-up is being driven by Budweiser’s Bud Light marketing blunder in the United States. Sales of Bud Light have slumped as much as 25%, while sales of Coors, Miller and others have jumped. It’s not clear how long this phenomenon will last, but the share valuation is becoming relatively full. We are reluctant to raise our price target from here. Shares of Molson Coors have produced about a 29% total return since our initial recommendation.

WHAT TO DO NOW: Remain optimistic. The market has steadily shown improvement during the past two or three weeks, with even yesterday’s rotation helping the broad market—and today’s snapback in leading stocks is good to see. Our Cabot Tides have effectively turned positive, and our Two-Second Indicator is close, too. Having just put a slug of money to work (including three new half-sized buys on Tuesday’s special bulletin), we’ll sit tight tonight, but if the good vibes continue, we’ll probably add more exposure next week. We have no changes tonight. Our cash position stands around 50%.

While everyone has been watching the highlight reel of top performers with leverage to the AI theme lately, the real story this week is that more areas of the market are shaping up.

Yesterday, while the Nasdaq sold off, we saw the S&P 600 Small Cap Financial ETF (PSCF) pop 3%. That came on the heels of a 4% rally Tuesday.

Yes, yes, I know. Nobody really cares about this ETF. But small banks make up almost a third of total U.S. deposits. They matter, bigly.

Explorer stocks gained or held their ground this week as the so-called “Mega-Cap 8” stocks dominate a narrow market for now.

China has become the 20% market – 20% of world GDP and 20% of multinational total revenue. This explains the steady stream of CEOs to China while Washington and Beijing top officials traded insults at a Singapore defense forum.

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.

We currently own the GLD January 19, 2024, 145 call LEAPS contract at $37. You must own LEAPS in order to use this strategy.

I will be exiting the American Express (AXP) trade today. I will discuss the trade in greater detail in our subscriber-exclusive webinar at noon ET tomorrow, April 21.

As discussed in our weekly issue last week, I will be taking a position in American Express (AXP) today.

With 30 days left until the May 19 expiration cycle ends, we have the ability to lock in roughly 75% of the original premium sold.

Sell Another Third of Shift4 Payments (FOUR)


This bulletin concerns Shift4 (FOUR), which has been weakening of late but not cracking – until today, when a short seller effectively questioned the firm’s books, causing the stock to sink on heavy volume so far today.

We currently own the CVX January 17, 2025, 125 call LEAPS contract at $59.80. You must own LEAPS in order to use this strategy.

By the looks of it JPM will have its first 5% move immediately following an earnings announcement since October 2008.

Tomorrow marks the earnings releases of several big banks, most notably JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC).

I want to add some downside exposure so with DIA trading for 337.40, I want to place a short-term bear call spread going out 37 days and outside of the expected range to the upside, or 350. My intent is to take off the trade well before the May 19, 2023, expiration date.

Our DIA bear call spread has hit its stop loss, so we are going to stay mechanical and exit the trade.

Our April 14, 2023 36 calls are due to expire this week. As a result, I want to buy back our April calls and immediately sell more calls going out further in duration. This will increase our deltas and allow us to benefit from continued upside in the underlying stock.

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.