Cabot Turnaround Letter Weekly Update
Today’s note includes earnings updates, ratings changes, the podcast and the Catalyst Report.
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At the most basic level, trading stocks simply means the buying and selling of stocks. If you’ve ever bought or sold a stock, then you’ve been involved in trading. But like many things in the investment world, context is important, and there is a big difference between trading stocks and investing in stocks.
When you invest in a stock, you’re committing to the long haul, at least within reason. That could be six months or five years or forever, but the intention is to put money into your chosen stocks and give that money time to grow and work for you.
Trading, on the other hand, is noted for extremely quick holdings, to exploit short-term market inefficiencies. These short-term positions can be in a wide range of investment categories: stocks, options, futures, currencies, exchange traded funds (ETFs), and virtually any other investment that can be traded electronically.
You’re probably most familiar with the concept in terms of day trading. From an investing standpoint, however, day trading is like gambling. We know that the stock market goes up over time. Day to day, you have no idea which direction the market is headed, and individual stocks can be even more difficult to pinpoint. Sure, people can succeed in doing it, but it takes considerable practice. You can’t just dive into day trading and expect to make money with any consistency.
We’re not completely averse to short-term trading. After all, we have an advisory called Cabot Top Ten Trader, which every week recommends the 10 hottest stocks on the market, complete with buy ranges and loss limits. But the timeline for owning the stocks Top Ten Trader recommends is weeks or months—not days, and certainly not one day.
There’s nothing wrong with trying to make a quick profit. In fact, the quicker you profit from your investments the better. But to make money in investing, the longer your timeline, the more the odds are in your favor. With day trading, your odds are a flip of the coin—at best.
To keep you on your toes, though, there’s also trading volume. Trading volume reflects the overall activity of the market, indicating the sheer amount of buying and selling of securities. Next to price, it is one of the most closely watched indicators.
Specifically, trading volume represents the total number of stock shares, bonds or commodities futures contracts traded during a certain period of time.
The major exchanges report trading volume figures on a daily basis, both for individual issues trading and for the total amount of trading executed on the exchange. Trading volume indicates market liquidity and the supply and demand for securities.
To get a more in-depth look at investing, trading, and all the important stock market information, download our FREE report, How to Invest in Stocks and Other Investing Basics, right now. This report gives you the information you need to start investing on your own.
Today’s note includes earnings updates, ratings changes, the podcast and the Catalyst Report.
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Arcosa (ACA) released an uninspiring report on Wednesday that was particularly ill-timed given yesterday’s market retreat. The company missed across the board. Revenue was up 2.7% to $459 million, missing by $4.7 million while adjusted EPS of $0.33 missed by $0.08. Guidance for 2021 missed...
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Personalis (PSNL) released preliminary Q4 results on January 11 and the official release after the close yesterday offered no surprises. Personalis (PSNL) Moves To SELL
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From the start of this intermediate-term advance back in early November through most of January, there weren’t many bad things you could say—yes, sentiment was bubbly, and there was the occasional horrid day or severe bout of rotation, but the major indexes and portfolios...
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Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
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Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
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More Cracks Appear
At the start of November we saw a couple of blastoff-type indicators flash green (like the Three Day Thrust rule), and that turned out to be the start of a powerful intermediate-term advance. During the next two-plus months, progress was relative there...
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The big picture for the market is that the uptrend is intact but under the surface we’re continuing to see pockets of turbulence. While the S&P 500 is just 2% off its high from last week and the S&P 600 Small Cap Index a..
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You may have seen that a relatively new Explorer idea, Fisker (FSR), was up 38% yesterday. It turns out that my analogy of comparing the company to Apple’s relationship to Foxconn was truer than even I could imagine. The news yesterday was that Foxconn will be a..
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Sprout Social (SPT) reported Q4 results yesterday that surpassed expectations. Revenue was up 32.6% to $37.3 million (beating by $1.4 million) while adjusted EPS of -$0.06 beat by $0.05. Guidance for 2021 looks solid with management calling for 2021 revenue of $172.5 million (up modestly...
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Earnings have been sensational. Reported earnings for S&P 500 companies have grown an average of 2% in the fourth quarter, compared to an expected -11%.
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“Legal Weed Stocks Dip Despite New Jersey Governor Signing Recreational Cannabis Bill Into Law”
That was the headline on one of my news sources yesterday morning, implying that the action of the stocks in light of that legalization event was somehow illogical. But as know...
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Upwork (UPWK) reported Q4 results yesterday that surpassed expectations on the top and bottom lines. Revenue was up 32% to $106.2 million (beating by $8.8 million) while adjusted EPS of $0.06 beat by $0.06. Guidance for 2021 also surpassed consensus.
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Open-Up Stocks Thrive While the Market Struggles
It’s been a rare down week in the market. But there’s nothing to be alarmed about. The S&P 500 is only down a little so far. And the uptrend that has existed for almost a year is intact.
Even...
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The stock market is clearly accelerating the “reopening” trade. Small cap and cyclical stocks as well as commodity prices are surging, interest rates continue to tick up (the 10-year Treasury yield is now 1.38%, up from 0.92% at year-end), and novel financial vehicles SPACs,...
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Judging by some headlines and my Twitter feed, you would think the markets are in meltdown mode. But I just checked and the S&P 500 is only 1.9% down from its all-time high. And the Russell Micro-Cap Index is down 4.0% from its high...
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We are modestly optimistic on energy prices – domestic production will likely remain subdued while global demand has essentially returned to pre-pandemic levels even though some petroleum-driven demand for gasoline and jet fuel hasn’t fully recovered yet.
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It gets a bad rap, but a reverse stock split can change the fortunes of a public company. Here are four reasons why more companies should do it.
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Buying investment real estate is the best way to take advantage of the current housing boom. But there's an easier way too.
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Last week wasn’t great for growth stocks and so far, this week is just plain awful. The primary culprits are known; risk of inflation and higher interest rates have pushed cyclical stocks up and growth stocks down (generally speaking).
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