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Universal Electronics (UEIC) reported earnings yesterday and shares are up 12%. Kraft Heinz (KHC) shares are up over 8% today on news that the company has made a bid to buy Unilever (UN).

Bull Put Spread

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On Tuesday, I announced the best-performing Investment Digest Top Picks from 2012 (if you missed the issue and are curious, you can read it online here.) Today, I’m sharing the winning Dividend Digest selections. But since most of our subscribers are looking for income when they buy Dividend Digest recommendations,...

Current Market Outlook


There have been a growing number of yellow flags among leading growth stocks in recent months, and last week the sellers finally came out of the woodwork, causing a quick 10% top-to-bottom drop in the Nasdaq and cracking the uptrends in many leaders. Where does that leave us? Overall, the market’s intermediate-term trend remains up, though it’s getting close to the fence as most indexes test their 50-day lines. Throw in the fact that many areas are holding up OK and we don’t advise you to sell wholesale. But with decisive weakness in most leaders following huge runs (and some climactic upside activity during the past two weeks), paring back makes sense, and from here, the onus is on the bulls to step up. We’re knocking our Market Monitor down to a level 5.

This week’s list contains a bunch of names that have either avoided any major selling or have pulled back normally to support. Our Top Pick is Penn National Gaming (PENN), which looks like one of a couple of leaders in the “new” gaming boom.

Stock Name	Price	Buy Range	Loss Limit
AutoNation (AN)	56.16	54-57	48.5-50
Boston Beer Company (SAM)	791.28	765-790	695-710
Chipotle Mexican Grill (CMG)	1299.15	1230-1270	1100-1125
Deere & Company (DE)	210.19	203-208	183-186
EPAM Systems (EPAM)	308.95	298-308	273-278
Farfetch (FTCH)	26.04	25-26.5	22-23
Five Below (FIVE)	122.69	120-124	106-108
Freeport-McMoRan Inc. (FCX)	15.72	15-16	13.2-13.8
Nintendo Co., Ltd. (NTDOY)	66.76	64-66	59-60
Penn National Gaming (PENN)	55.31	53-56	44-46

The market finished modestly higher yesterday after the Fed decided to hold interest rates steady but hinted at cuts down the road. At day’s end, the Dow was up 38 points while the Nasdaq finished higher by 33 points.

It had to happen sooner or later, but the broad market is showing increased signs of stress as a result of what some have described as a case of “too much participation” from retail investors.

However, the good news is that this week’s increase in selling pressure across the formerly high-flying segments of the market serves to relieve some of that excess heat, particularly in the high-tech stocks. More importantly for our purposes, it also throws into sharp relief the usefulness of embracing the contrarian approach to investing that turnaround investors typically rely on.

Happy New Year! The market remains in great shape, with the vast majority of evidence positive—and, given that we are coming off of two years in the muck, with big declines in 2022 and (for the most part) lots of bottoming-out action in growth stocks and the broad market in 2023, we see great potential going ahead for a real bull phase. That doesn’t mean we’re complacent or leaving our brain at the door, but we’re leaning bullish and putting money to work. Tonight we’ll add one half-sized position in a leveraged long index fund, leaving us with around 20% in cash.

Many analysts have been touting the coming correction, which has not yet appeared.

Chasing high yields can be dangerous. But these five stocks with dividends over 5 percent have more sustainable yields with lots of profit potential.

The cannabis sector remains unloved as investors abandon hope that President Donald Trump will come through on his campaign promise to reschedule the drug.

Moving cannabis to Schedule III from Schedule I under the Controlled Substances Act would help cannabis companies by obviating an IRS rule that prohibits them from deducting operating expenses (Rule 280E).

I continue to think Trump will live up to his “promises made, promises kept” mantra. It will take some time, because he’s obviously active on many fronts, and cannabis reform does not rise to the level of top priority. Polls continue to show the majority of voters favor reform, particularly younger voters. So, there’s a favorable political angle for conservatives in cannabis reform. Cannabis sales growth continues to be particularly strong (6.2%) in Missouri, a red state.

In the June Issue of Cabot Early Opportunities we take note of the market’s string of all-time highs and accelerating pace of consumer spending.

Against that backdrop we present a batch of stocks that offer exposure to a variety of trends, from retail spending and auto maintenance to consumer lending, customer care for enterprises and even vaccine manufacturing.



As always, there’s something for everyone!



Enjoy!

Cabot’s intermediate-term market timing indicator has swung back to the positive side, lending a bit of ammunition to the bulls, but a look at the bigger picture reveals that the market remains in the sideways trading pattern that has defined it since the market’s initial selloff at the start of February.

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