After a rare down week for the market, and with the Fed set to potentially pour their usual pitcher of cold water on investor enthusiasm again this week, it’s possible an extended pause or even a modest pullback in stocks is in order. With that in mind, today we add another safety play in the form of a high-yield business development company Tom Hutchinson recently recommended to his Cabot Dividend Investor readers. And it’s not some stodgy, slow-burn title – the stock is trading at 52-week highs!

We are finally through March expiration and volatility continues to remain at low levels. Volatility is starting to perk up a little, but the VIX still sits below 15, at 14.41. Until we see a sustained push towards the 18 handle, we should expect to see market complacency rule the day. A return to more normal levels of volatility (18 to 22) would allow us to expand our positions. Until then, we patiently wait for Mr. Market, and more importantly, probabilities, to lead the way.

Our Income Trader portfolio continues to shine with a total return of 159.2%.

We should be able to add to our total this week by locking in profits on our most conservative position, PFE. It’s only a paltry 1.4%, but the wheel approach lives on singles and doubles. Since we introduced PFE to the income wheel approach we’ve made a steady 30.89% in total returns (16 trades) while the stock has lost over 40%.

Earnings season is behind us, but as always, there are a few companies yet to report earnings. Micron (MU) is our focus this week. With an IV rank of 93.1, it makes sense to look at a potential trading opportunity in the company, which I’ve done in the trade ideas below. The range we created looks nice and wide, while the premium is at attractive levels. The company is due to report after the closing bell today, so if we decide to place a trade look for an alert around mid-day Wednesday.

The markets saw mostly sideways action in the past month—the soothsayers are still debating when the Fed will begin reducing interest rates. Growth stocks held on to their leadership position, although value stocks are beginning to show life in 2024.

Good gracious, last week was volatile for the market as the indexes moved violently day-to-day. Yet, by the close of trading on Friday the S&P 500 and Dow were only down marginally on the week, while the Nasdaq had declined by 1.5%.

Bitcoin is sometimes referred to as “digital gold,” but investors should also have some of the real stuff. As J.P. Morgan put it, “Gold is money. Everything else is credit.” So today, with gold prices on the rise, we add exposure to the yellow metal in the form of a low-risk streaming and royalty company.

Good gracious, last week was volatile for the market as the indexes moved violently day-to-day. Yet, by the close of trading on Friday the S&P 500 and Dow were only down marginally on the week, while the Nasdaq had declined by 1.5%.

The rich get richer. Now, you can too.

Growing businesses with big ambitions need large amounts of money to grow and expand to the next level. But these enterprises can’t get the necessary capital from stodgy and risk-averse bankers. And they are still too small to access the capital markets by issuing stock or bonds. Thus, they are forced into the domain of wealthy individuals and institutions that have money and are itching to reap high returns.

These venture capitalists provide desperately needed money to up-and-coming businesses that can’t get it anywhere else. Thus, they are in a position to negotiate very favorable terms for themselves.

As financial markets have grown in sophistication, venture capital investing is no longer the exclusive domain of the wealthy. There is a little-known class of security that enables regular investors to mimic the very same moneymaking strategies employed by the rich and famous. These securities are called Business Development Companies (BDCs).

In this issue, I highlight one of the most successful BDCs on the market. It pays dividends every single month, has a long and consistent track of raising payouts, and has delivered fantastic total returns.

Good gracious, last week was volatile for the market as the indexes moved violently day-to-day. Yet, by the close of trading on Friday the S&P 500 and Dow were only down marginally on the week, while the Nasdaq had declined by 1.5%.

Starting a month ago, we began to see some leaders chop around, then we saw more short-term froth appear followed by Nvidia’s monstrous reversal last Friday. We’re not making any grand declarations here, but overall, most of the “extended” leaders are being tested, with more than a few wobbling and zeroing in on intermediate-term support and a few already cracking. Now, with that said, most of the other evidence remains fine, whether it’s for the overall market or for “fresher” leadership names, which continue to act well. We’re leaving our Market Monitor at a level 7, but how things play out over the next few sessions will be key.

This week’s list mostly lives outside the tech arena, with many names that have recently taken off and some that are pulling into areas of support. Our Top Pick is blasted off in late January, enjoyed a big run and is now shaking out normally.

Stocks finally had a down week, though the damage was modest. Is it the start of a longer retreat, or a rare speed bump in a relentless bull market? This week could tell us a lot, especially with more inflation data set to print. To better fortify our portfolio against any potential turbulence, today we add an industrial stock that’s a strong value play that is a new addition from Bruce Kaser to his Cabot Value Investor portfolio.

Small caps are off about one percentage point over the last week while the S&P 500 is almost dead flat.

All things considered, that feels like a win to me – largely because the Fed signaled potential for two more rate hikes throughout the year. The Fed’s rate hike program has been the market’s bogeyman for over a year. The message the market is sending now is that, yeah, you might keep us on our toes, bogeyman, but we’re not scared any more. You can be dealt with.

The impressive rally that has confounded so many may be running out of gas.

As of Friday’s close, the S&P 500 is up about 15% YTD and over 20% from the October low, making it officially a new bull market. Investors are optimistic that inflation is falling, the Fed is almost done hiking, and there is no recession in sight. The market is sensing that we can get through this rate-hiking cycle without much pain.

But this rally is not as impressive as it seems. Only about 10 large technology stocks account for just about all the YTD gains. The other 490 stocks on the index have collectively gone nowhere.

“Don’t fight the tape” is a famous expression that I’ve learned to appreciate.

I don’t know who coined the expression, but it refers to the practice of not going against the prevailing trend or momentum of the market.

The phrase emphasizes the idea that it is generally unwise to take positions that oppose the direction of the overall market trend.

Here in New England, the weather can change quickly. A sunny morning can seemingly without warning turn into a rainstorm by the afternoon. Not that long ago, we had three seasons in a single day – snow in the morning, followed by rain, then summer-like temperatures by three in the afternoon. There’s an old saying, “If you don’t like the weather, wait a few minutes.”

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 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.

The recent rally in the Dow has pushed several of our Dog stocks higher. As a result, several of our short calls are being tested and the overall deltas of those tested positions are nearing parity.

I am buying back our short calls today and immediately selling more premium. The underlying stock position is up 4.07% since we initiated the position. Our DOW position is up 6.17% over the same time frame.

INTC has pushed through our 31 call strike, and the delta of our short call is nearing parity with our current LEAPS contract. As a result, I want to buy back our short calls and sell more calls.

Our March 31, 2023, 59 puts are essentially worthless. As a result, I want to lock in the profits and immediately sell more premium.

As a reminder, this trade is for the CVX position in the Growth/Value Portfolio, not the CVX position that resides in our Dogs of the Dow Portfolio. I have a CVX position in both, as both portfolios are looked at as separate entities to keep things mechanical and consistent.

With 24 days left until expiration, we have the ability to take off our SPY iron condor for a nice profit.

INTC has pushed through our 27 call strike, and the delta of our short call now stands at parity with our current LEAPS contract. As a result, I want to buy back our short calls and sell more calls. Reestablishing our deltas will allow us to participate in any further near-term upside in INTC.

With the Russell 2000 ETF (IWM) trading for 172.95, I want to place a short-term iron condor going out 57 days. As always, my intent is to take off the trade well before the May 19, 2023, expiration date.

Our BITO March 31, 2023 puts are essentially worthless, so we can lock in some decent profits and immediately sell more puts.

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 need to roll our short calls in TIP prior to expiration. However, I intend on allowing our DBC short calls to expire worthless and sell more premium at the onset of next week.

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.

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.