Bigger Picture

Good morning!

The update to January Effect candidates will be delayed until this weekend, partly because January Effect candidates haven”t been a attracting sponsorship yet. I will be adding Precious Metals related issues, and shuffling some coverage among Energy stocks.

ARNA — popped up sharply yesterday, fulfilling its 6 target at yesterday”s high. A Head & Shoulders pattern had been fulfilled before we resumed focus on the issue during Monday”s recorded Livestox at 3.50. The highest reversal target of the H&S pattern was 5.85. That”s where the stock closed, so a pullback to 5.15 or even to 4.60 has become likely. Otherwise, closing today instead above 6 would target 9.

GWPH — bearish since Nov 20”s Ascending Triangle breakout immediately met its 61.8% extension, and the next session failed to extend higher and confirm. The minimum target would be to retrace at least all of that rally”s upleg back under 58. Each bounce”s retracement held 61.8% of its prior dip, and each retracement was reversed down to lower lows. Pre-open action attacked 50 before reacting up sharply to attack 70. I would have considered buying dips to the 52-54 area for a short-term bounce, but not necessarily if 52-54 isn”t tested this morning.

I”ll update post-open observations in this post”s Activity Feed thread. Please post chart analysis requests there.

Wednesday”s Livestox first updated the three types of New Year”s rallies we discussed Monday, exemplified by ENRT, CBIS, and EDXC — and contrasted that to stocks like CARA.

Next we covered other mentions from Monday: NLNK, STEV, GRNH and ARNA.

Requests were then addressed beginning at the 22:00 minute mark, in this order: NDRM, NVLX, INSY, ZNGA and GRFS.

This morning”s Livestock starts at 10:45am ET…
Login info: (iPads and Tablets use the accompanying teleconference info to get audio.)
https://roddavid10.mitel-nhwc.com/join/pcxsrhm

optional teleconference instructions (required for iPad and tablets):
1-605-562-0020
Meeting ID 976-912-682 #
Other requirements can be found here:
http://marketfy.com/product/stock-technical-trade-alerts/blog/1143/view/60141/

In yesterday”s Livestox, I discussed the past week”s broader market decline. The discussion was about how that might be influential to the marijuana sector”s recent strength, and how not. I”m elaborating below after reading questions/comments that members posted to the Activity Feed…

Capital may flow between more or less speculative stocks that are represented on the DJIA and NDX. This happens naturally with the ebbing and flowing of sentiment. It ebbs and flows between being more or less speculative. But that same capital does NOT flow between bigger capitalized DJIA/NDX stocks and penny stocks. Investors/traders that might choose VAPE over MSFT aren”t so well-funded that their absence will depress the NDX. But that relationship need not cut both ways, which I”ll address at the end.

The Marijuana sector might rally for its own internal reasons like legislation, acquisitions, or tax loss selling. Those features might be leveraged by there happening to be a greater speculative sentiment at the time. That speculative sentiment isn”t necessarily an extreme version of the same speculative sentiment that can benefit the NDX. Rather, it is its own speculative sentiment, beyond the normal boundaries of there being more or less speculative sentiment among bigger cap stocks.

My point in Livestox was that the MJ sector has started the year from deeply oversold conditions. Being deeply oversold has insulated the sector from the general sentiment shift in the broader markets. Rather than rallying sharply because they”re already on an upswing like in 2014 with attention from CNN et al showing long lines at Colorado”s newly-opened dispensaries, 2015 is reacting to the expiration of one source of sellers.

That is a general assessment of the sector. Specific stocks may be different. Some had bottomed already, so that this week”s buying is triggering breakouts above resistance. Some were at least not trending down further into year-end. But others have suddenly reversed up from trending down relentlessly to new lows, and those issues should be approached more cautiously, if not also skeptically.

Back to the broader market, and how both DJIA and NDX ends of the spectrum have been in decline. This is discounting the NDX price. This will eventually become an attraction that can suck out many MJ sector traders — less so to the benefit of the NDX, and more to the detriment of the MJ sector. Recent big drops in the NDX seemed to have no effect on the MJ sector. It”s not that the MJ sector is immune to NDX sentiment shifts — it”s that they don”t overlap consistently… Look out when they do.

Stocks discussed during Monday”s Livestox were secondary to bigger themes developing as we speak. Namely, is the broader market in the midst of an extended decline, or nearing its end? Is the marijuana sector repeating 2014”s kick-off, or is 2015”s jump start going to run out of juice sooner? Which stocks/patterns are ripe already for positioning, and which should be considered only for trading (if at all)? Stocks discussed in order were:

ENRT, MCIG, EDXC, EAPH, VAPE, TAUG, TRTC, ERBB, HEMP, CBIS, ATTBF, INSY, GWPH, STEV, GRNH, NLNK, CARA, CELG, TKMR