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.

In the March Issue of Cabot Early Opportunities we spread things around with a diverse group of mid-caps, plus one large cap from our Watch List that’s one of the biggest stories in MedTech.

As always, there’s something for everybody.

Enjoy!

Before we get into this week’s covered call idea, we have two positions we need to address coming out of expiration Friday.

Because the market has somewhat lost its momentum recently, we are going to exit our WDC and WSC stock positions, as the March calls we sold expired worthless on Friday.

The intermediate-term trend of most major indexes and most leading stocks is still pointed up, but there’s no doubt we’re seeing much more choppy action, with most leading stocks basically marking time since early February. The good news is that, while we are seeing some sluggishness and a larger number of potholes, there are some areas of the market that are perking up—retail names started to pop three or four weeks ago, and more recently we’ve seen some commodity areas begin to flex their muscles. As we said last Friday, then, it’s not so much that there are major red flags out there, but more that the very bright green light has dimmed some as money starts to slosh around and some uncertainties (like interest rates and the Fed) pop up. We’ll again leave our Market Monitor at a level 7.

This week’s list is heavy in commodities and newer retail names, and our Top Pick looks like it’s leading what could be a group move.

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.

The S&P 500 delivered an impressive 16% return in the first half. Can the good times continue in the second half?

A big part of the latest surge higher has been the artificial intelligence (AI) excitement. After Nvidia (NVDA) blew away expectations citing far greater demand for AI technology, the market-leading tech sector caught fire. But returns were impressive even before then as the market is sensing a soft landing.

Hope you had a wonderful 4^th of July!

The weather was less than ideal (raining all day in Wellesley, MA, where I live) but we made the most of it and had friends over for some hot dogs and hamburgers.

This has been the rainiest start to the summer in a long time. Fingers crossed better weather awaits us in the second half of July and August.

It has been a fabulous rally that has proven naysayers wrong. The S&P 500 is up about 15% YTD just before the midpoint. Stocks have also rallied more than 20% from the October low into a new bull market.

How much gas is left in the tank?

Inflation is falling and the Fed is almost done hiking rates. It is also looking less likely that there will be a recession this year. Investors are optimistic that we can get to the other side of this hiking cycle without too much pain.

This week, we comment on earnings from Walgreens Boots Alliance (WBA). We also include the Catalyst Report and a summary of the July edition of the Cabot Turnaround Letter, which was published on Wednesday. We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.

Small caps put together a decent week as the iShares Core S&P 600 Small Cap ETF is up 3.6% from last Thursday’s close.

Digging a little deeper, we’ve seen a lot of strength in small-cap industrials and tech plus some stability in small-cap financials and energy.

Things are looking up. Inflation is falling. The Fed is almost done hiking. And there is no recession to be found.


The market has surprised just about everybody in the first half of the year. The S&P had risen 13% as of days before midyear and over 24% from the October low. This new bull market is not what was expected.



After an abysmal 2022, most pundits were expecting more ugliness in the first half of this year and a recovery somewhere in the second half. But investors sensed that we could get through this Fed rate hiking cycle with minimal pain. Then artificial intelligence (AI) gave stocks a further boost.

Last week, I wrote about how the U.S. markets look expensive both on an absolute basis and relative to international stocks.


Since then, the market has pulled back by about 3% following a couple of hawkish comments by Jay Powell.



Nonetheless, the S&P 500 chart looks relatively healthy and I’m not in a rush to “fight the tape.” Upward trending markets tend to continue to trend upwards.

Within the span of the weekend, Yevgeny Prigozhin, head of mercenary army Wagner Group, launched a highly publicized and well-armed takeover attempt against Russia’s Vladimir Putin-headed government, then melted away into the murkiness that is the Kansas-sized Republic of Belarus.

This past week, none of our companies reported earnings and there were no ratings changes.

Shares of ESAB Corp (ESAB) are approaching but remain below our 68 price target. We like the company’s fundamentals, and the valuation isn’t stretched, so we see no reason to change our rating, at least until the shares reach or exceed our price target.

WHAT TO DO NOW: Remain optimistic. The market and leading stocks have finally begun to pull in somewhat, but the action has been completely normal so far and our market timing indicators are bullish. We’ve put a good chunk of money to work of late, and tonight we have one small addition—we’ll add a half-sized position (5% of the portfolio) in DraftKings (DKNG), which seems to be set up well. That will leave us with around 35% in cash, which we’ll aim to put to work (including, ideally, by filling out some existing positions) if the market continues to behave itself.

Fed Chairman Jerome Powell again threw a wrench into the market by warning that a couple of more interest rates hikes are probable this year. “The process of getting inflation down to 2% has a long way to go,” he told the House Financial Services Committee during a three-hour hearing. Not sure why they don’t get this over with.

Indian Prime Minister Narendra Modi arrives in America on his first official state visit with India’s geopolitical pull higher than at any point since he took power in 2014.

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.

It’s time to start selling puts again in GDX. We’ve managed to bring in 10.8% worth of premium since introducing GDX to the Income Wheel Portfolio.

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.