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Cabot Prime Pro Week Ending October 6, 2017

Cabot Prime Pro Week Ending October 6, 2017

Cabot Weekly Review

In this week’s stock market video, Paul Goodwin looks at the string of advances by all the major indexes and pronounces it a full bull market. He then explains why responsible growth stock advisors are issuing warnings about the correction that will have to come sooner or later. The consequence is that everyone should be doing some buying, but should also be sure to establish stops/loss limits at the same time. Paul also gives a few examples of stocks that are enjoying the sector rotation and a few well-positioned leaders.

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Cabot Growth Investor

Bi-weekly Update October 4: With the intermediate- and longer-term trends pointed up, we’re doing a good bit of buying, increasing our position in ProShares Ultra S&P 500 Fund (SSO), buying the second half of our position in Exact Sciences (EXAS) and adding a full (10%) position in Five Below (FIVE). In response to Today’s big dip in Shopify (SHOP), we are selling half of our position and holding the rest.

Other Stocks of Interest September 29: Follow ups to stocks featured April 26, 2017 (issue 1366) to September 27, 2017 (issue 1377). Since they’re not in the Model Portfolio, you don’t see them followed on a regular basis. However, we are monitoring these stocks, and this listing gives their current momentum status.
Bi-weekly Issue September 27: Mike is encouraged with the support we’ve seen since Monday, in both the broad market and growth stocks. He’s standing pat with 27% in cash, but a continued rebound should provide some low-risk entry points in new leaders. He details our recent moves and his thinking, and updates the track record of our most reliable market timing indicator.

Cabot Top Ten Trader

Movers & Shakers Weekly Update October 6: As usual, we’ll go with what the market gives us. Right now, the bulls are in charge and you should be bullish, but not complacent. Buy ideas: Alcoa (AA), CBOE Holdings (CBOE), China Lodging Group (HTHT), Meritor (MTOR) and Valero Energy (VLO). Sell Shopify (SHOP) and NovoCure (NVCR).

Weekly Issue October 2: This week’s Top Ten has a slew of very strong charts, including many newer names. Our Top Pick is AbbVie (ABBV), a stock we missed a couple of weeks ago but are very interested in after its gigantic-volume liftoff in recent weeks.

Cabot Options Trader and Cabot Options Trader Pro

Note that the current week’s Weekly Update, earnings updates, position updates and stocks on watch are posted on the website in the Market Update section, which is deleted each week.
Sector on Watch October 6: The financial stocks have been on a meteoric rise in the last month, and many are trading at all-time highs, or at highs not seen since before the financial crisis. And into this strength, call buyers have been aggressively adding positions looking for further upside.

Trade Alert October 5: Sell HALF your Johnson Controls (JCI) April 41 Calls for $2.65 or more.

Trade Alert October 4: Buy Yelp (YELP) January 47 Calls (exp. 1/19/2018) for $3.75 or less.
Options Education October 4: Jacob shares a question and his answer about how he handles winning trades.

Sector on Watch
October 2:
As the fourth quarter begins, Jacob is watching to see which sectors the fast money rotates into. One sector that caught his eye today is the pharmaceutical/biotech stocks.

Weekly Update October 2: Traders this week will be focused on two major catalysts: Janet Yellen speaking publicly on Wednesday afternoon and the Jobs Report Friday. These two events have the potential to swing traders’ thoughts on the likelihood of a Fed interest rate hike in December.

Stocks on Watch
September 29: Jacob says technology is continuing to show strength. Autodesk (ADSK) and Broadcom (AVGO) are at the top of his watch list for a new position.

Daily Watch List: Order Flow Reading is a strategy Jacob uses to follow the biggest hedge funds or traders into their trades. These are recent large order flows that Jacob has spotted, plus two covered call ideas.

Cabot Undervalued Stocks Advisor

Special Bulletin October 6: Crista point out a problem that she foresees, potentially on the scale of the technology bubble in 2001 and the housing bubble in 2007. She thinks we’ll have an “inverse ETF bubble.”

Special Bulletin October 5: Invesco (IVZ) and Goldman Sachs (GS) are closing in on price targets, plus a list of great stocks to buy today: Weyerhaeuser (WY), KLX Inc. (KLXI), Nucor (NUE) and Apple (AAPL).

Special Bulletin October 4: Crista offers some ideas on how to trade Dollar Tree (DLTR), which has reached medium-term upside price resistance, and Schnitzer Steel (SCHN), which has fallen today due to selling pressure.

Monthly Issue October 3: Today’s featured stocks include two new additions to the portfolios—Nucor (NUE) and Schlumberger (SLB)—and Bank of America (BAC). There are a couple of rating changes today, after recent price run-ups: Today’s Portfolio Changes: BP plc (BP) moves to Hold, Legg Mason (LM) moves to Hold and Schnitzer Steel (SCHN) moves to Sell.

Cabot Stock of the Week

Weekly Issue October 3: One of the new strong sectors is biotechnology. Last week’s recommendation is on the fringe of category, but today’s recommendation, Exact Sciences (EXAC), is smack in the center of it. The portfolio continues to perform well. Of course, that’s as much a result of the strong bull market as anything, but portfolio management has played an important role, too. Today we are taking profits in Schnitzer (SCHN), which has hit a resistance level.

Cabot Emerging Markets Investor

Bi-weekly Issue October 5: Despite some nervous-making weakness last week, the Cabot Emerging Markets Timer has bounced back to regain its green-light status. And with our stocks acting well, the situation looks excellent, although we’re issuing the usual bull-market warnings that this can’t go on forever. Today’s featured stock is Sina Corp. (SINA).

Cabot Benjamin Graham Value Investor

Special Weekly Update October 5: After weeks of consultation with Roy Ward, Azmath has decided to make several changes to the Cabot Benjamin Graham Value Investor. Azmath also includes updates on Thor Industries (THO), which reported earnings, and General Motors (GM), which has hit its Min Sell Price and should be sold.

Special Bulletin October 5: Azmath Rahiman introduces himself as the new chief analyst of Cabot Benjamin Graham Value Investor and tells you about himself and his investing philosophy.

Monthly Enterprising Issue September 7: Roy writes that Canadian stocks are more undervalued than U.S. stocks, and the Canadian economy is now improving noticeably for the first time in a long while. Consequently, Roy adds Canadian company, Alimentation Couche-Tard (ATDB.TO), to the Model.
Monthly Value Model Issue August 31: The Cabot Value Model contains 16 securities this month with three new stocks: Apple (AAPL), Home Depot (HD) and Ross Stores (ROST). Three stocks transition out of the Model: Disney (DIS), FleetCor Technologies (FLT) and Lowe’s (LOW).

Cabot Small-Cap Confidential

Monthly Issue October 6: A year ago, a group of college kids laid out the case for a Trump’s victory. And they did it with a mess of disparate data in just 20 hours using a data prep platform by the little-known company that Tyler is recommending today: Datawatch (DWCH). One rating change: US Concrete moves to Buy.

Cabot Dividend Investor

Weekly Update October 4: Overall, the market is looking healthier, and Chloe is putting three stocks (one from each tier) back on Buy today: Pembina Pipeline (PBA), BB&T Corp (BBT) and ConEd (ED).

Monthly Issue September 26: Chloe is adding CME Group (CME), a unique play on financial markets, to the Dividend Growth Tier. She also writes about interest rates—the driving force behind many of this month’s sector rotations. No ratings changes.

Wall Street’s Best Investments

Daily Alert October 6: Monster Beverage Corporation (MNST) from Validea Hot List Newsletter
Daily Alert
October 5: Consolidated-Tomoka Land (CTO) from Upside
Daily Alert October 5: Sell Primerica (PRI) from Upside
Daily Alert
October 4: iShares Latin America 40 ETF (ILF) from The Investment Letter

Daily Alert
October 3:
Exact Sciences (EXAS) from Cabot Growth Investor
Daily Alert October 3: Sell one-half of Universal Display (OLED) from Cabot Growth Investor
Daily Alert
October 2: Gemphire Therapeutics (GEMP) from Canaccord Genuity Research

Monthly Issue September 20: This month’s Spotlight Stock is PTC Inc. (PTC), a technology company that is a leader in the all-important cloud business, and Nancy’s Feature further explores that cloud industry and the up-and-coming applications that should see it expand greatly in the near future.

Wall Streets Best Dividend Stocks

Daily Alert October 6: Deutsche Telekom AG (DTEGY) from Capitalist Times
Daily Alert
October 5: Aqua America (WTR) from Argus Weekly Staff Report
Daily Alert
October 4: Bank of Oklahoma (BOKF) from Positive Patterns
Daily Alert October 3: WEC Energy Group (WEC) from Dow Theory Forecasts
Daily Alert
October 2: First American Financial (FAF) from DRIP Investor

Monthly Issue September 13: Nancy’s contributors are staying mostly on the safe side—with recommendations paying solid and rising dividends. We also offer several stocks with a more adventurous bent this month. Spotlight Stock: Fastenal (FAST).

This Week’s Q&As

Cabot Growth Investor

Question: What is your advice on Shopify (SHOP) after today’s 10% drop?

Paul: There may be a time for bargain-hunting SHOP in the future, but I think it should be sold now. The downside risk is just too great. Also, after a big correction on high volume such as SHOP has been through, it may take months for it to recover.
I could be wrong and SHOP could bounce back quickly, but the odds (and history) make that unlikely.

Cabot Options Trader and Cabot Options Trader Pro

Question: I’m not optimistic for Verizon (VZ)’s future, however, with a big dividend and it paying soon, would it be a wise time to buy shares of VZ for a short period of time? I would rather buy options to participate in the payout over the next month+. Any thoughts? How does one get the dividend on options?

Jacob: You do NOT get the dividend if you own call options. However, if I wanted a somewhat defensive strategy, that would enable you to collect the dividend, you could buy the stock and sell a call—which is looking for sideways stock action. You would have downside risk if the stock falls (though that downside is similar risk to if you just owned the stock).
For example, you might buy the stock and sell the November 50 Call, which would allow you to collect the dividend, and at the same time, collect approximately $0.70 from the sale of the call.

Question: I was looking at your services and I am really interested. My goal is to build my portfolio. I understand options, but what could I expect by using your services?

Jacob: Thanks for the interest. Here’s what you would expect:
Every morning, you receive a Daily Order Flow list. This is my list of the largest options trades made from the prior day. Some readers use that list to execute similar trades. Others use it to get a sense for which sectors the hedge funds/institutions are targeting for upside/downside moves. Also, on that daily morning email, you get two covered call ideas.
In addition, you will receive trade alerts, which are trades that I am recommending and executing. After we execute that trade, I will continue to update my thoughts on the position until we finally close that trade. Depending on market conditions, I recommend 1-2 trades a week. Though if market conditions aren’t right, I won’t trade at all. I don’t push ideas, just to produce content. I’m in the business of making money, not content.
However, I also send some ideas via Stocks on Watch. These are ideas along with my analysis on trades that we may soon execute, or that you may choose to execute on your own.
Also, I write quite a few Options Education articles. Sharing my experience and knowledge on options is my true passion.
And during earnings season, I break down what I’m seeing in the options world for the biggest stocks due to report each day.
You also get access to my personal email, and I typically respond to questions within an hour or less.
And lastly, every Monday morning, I write up a market recap of the past week, what to expect in the upcoming week and updates on our positions.
Trust me, you get a ton of volume/ideas/education from me. If you have any further questions, don’t hesitate to follow up with another email.

Question: What’s your view on SPY Jan 245 Puts? Sell and buy back? I am intrigued by pullback in USO (upside) and PFE. Thoughts?

Jacob: As the only bearish position in the portfolio, I am going to continue to hold the SPY puts. Hopefully, they never go in the money!
Pfizer, is top of my watch list as of yesterday. That said, it was only the first day of the quarter, so lets see how it does today/tomorrow. USO has been a sloppy mess in 2017, and I don’t have much of an opinion.
However, PFE and USO calls are SOOO cheap that buying upside calls is a no brainer if you like those stocks. PFE March 37s are what I was looking at yesterday, and any upside USO call is cheap.

Cabot Undervalued Stocks Advisor

Question: Do you have any recommendation for Square (SQ)? It looks impressive.

Crista: Square (SQ) does not fit my investment strategy because the chart is incredibly overextended. I prefer to identify stocks that are breaking out of long-term trading ranges, because the risk/reward equation is heavily balanced in my favor. In that light, the stock I’d buy today is Weyerhaeuser (WY). Runners up include Bank of America (BAC) and KLX Inc. (KLXI).

Question: How would you suggest I go about building a portfolio of your picks? Should I just buy the ones you have strong recommendations on? I prefer to invest for Growth and Income

Crista: Right below the intro to each week’s newsletter, I list “Buy-Rated Stocks Most Likely to Rise More Than 5% Near-Term”. Those stocks have attractive fundamentals and also have bullish price charts. My suggestion is to start with the stocks in that list, and buy the ones that best fit your investment strategy. Then scroll through the newsletter and read about the buy-rated stocks with the larger dividend yields, to find additional good selections.
I also want to point out that I have very specific investment criteria (EPS, P/E and debt ratio). If the stock doesn’t exactly meet all the criteria, I’ll give it a Buy rating rather than a Strong Buy, but I still expect the Buy-rated stocks to perform quite well. Just avoid the Hold-rated stocks, because for various reasons I don’t anticipate a good near-term capital gain opportunity. Oftentimes they’re either getting close to my price target, or they’ve fallen and they’re not yet ready to rebound, and that’s why they’re a Hold.

Cabot Emerging Markets Investor

Question: In this week"s newsletter, you state the timer has gone neutral, which is confusing. While I understand the cautionary note, the EEM is still above both 25 and 50 day trend lines, and both of those are still trending up. So wouldn’t this still be a bullish indicator? Thanks for clarifying this for me. PS: Thanks for your great advice on the EM stocks—it’s really been beneficial for a portion of our retirement plan.

Paul: It’s a matter of timing. Last Thursday, when the update went out, EEM was sitting just above 44, which was below both its 25- and 50-day moving averages. EEM improved last Friday and again today (at least so far), which gives us the all-clear. But the neutral designation was appropriate for what was happening then. Here’s the chart.

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