Bigger Picture

There are a couple of double-digit gainers in the Cannabis sector as we come into the last hour. This isn”t runaway enthusiasm, so reducing exposure before tonight”s election results is only a strategic decision — nothing technically or in the charts suggests that a negative knee-jerk reaction down won”t be recovered. Not all stocks have behaved bullishly recently, so beware of being long them at anytime, let alone heading into a major news event.

VPCO has been strong all day, now more than doubling from last week”s dip that held its pullback limit under 1.70.

ATTBF — Finally probed fresh lows, albeit stopping just short of my objective before bouncing. Back above .25 would now be bullish.

TAUG — I noted earlier that yesterday”s dip back to the month-old low has been retraced prior to probing fresh lows, let alone my lower objective.

INSY — Volume is deteriorating into today”s bounce, which isn”t being too successful at retracing yesterday”s drop.

GBLX — Despite already having fulfilled its 1.50 target, the uptrend could still resume so long as pullbacks hold 1.00 as support.

Check out comments posted to the prior thread throughout today follow below. Stocks discussed include SRNA, CLF, CANV, HEMP, GBLX, INSY. The bottom-line is that I”m really impressed with the sector”s improvement throughout the day. Just a few single-digit gains this morning have broadened out to many double-digit gains as the close approaches. A lot of resistances being tested, too, so pullbacks aren”t inevitable. But they would be originating from higher levels to help absorb selling pressure.

Today”s one thing is… Chew your food.

I shared two observations in this week”s The Universe. First, the percentage of Marijuana sector stocks in an uptrend hasn”t been this high since tracking the metric. Second, the percentage of uptrends vs. downtrends is also reading its best yet.

This bar chart portrays the ratios. Green is the uptrends, and yellow is the percentage of covered stocks that are flat and ranging. A couple of other observations might jump out while visualizing the data.

– The percentage of uptrends is still half that of downtrends.

– The percentage of downtrends is not at its weakest point.

So, optimism has been more influential recently. And, why not. Tuesday”s elections offer the potential for a positive news cycle from legalization / decriminalization initiatives. Headlines would likely attract more buyers. Bear market mentality could soon turn into Bull.

Just a word (or two) of caution: Suddenly higher prices become attractive to the same selling mentality that pushed price to recent lows. Chasing the rally might not be necessary in even the most bullish scenario, not if last-minute selling creeps in.

Also, rising prices have discounted an optimistic future, not cemented it. Tomorrow”s favorable news is reflected in price, discounted by the odds of losing some or all of the votes. The strongest of moves rarely develop in a single gulp — rather, the market savors them.

Finally, a clean sweep doesn”t immediately drop down to the entire sector”s bottom-line. The past several weeks have been buying the anticipation. Now comes the news…

Filter THIS! …is a missive that tells you one thing, the most important thing, if you had to filter your view of today”s marijuana stocks price action through just one thing — okay, sometimes two — what would that one thing be?

Making money in Cannabis stocks was easy during 2014”s first quarter. The sector”s bear market fogged those memories, but your tax advisor will remind you. 

You may be able to offset capital gains taxes, but not if you wait too long to take action — and not if you act incorrectly. This webinar with Rod David and Alan Brochstein discusses why you should get advice now, some questions you should ask your advisor, and some strategies to make sure your advisor knows.

You”ll learn
1. How to identify profitable swaps between similar companies
2. How to best utilize your tax losses
3. What bottoming patterns to watch for that will identify January Effect candidates

Note: I publish “The Universe” every weekend, updating my support and resistance calculations for Marijuana sector stocks. It is not a projection, but a handy reference… Non-Marijuana stocks are covered elsewhere during the week.]

Links to || Last week”s Universe || Prior week”s Universe || Previous week”s Universe ||

I”ll post more about this for the next “Filter THIS” column. For now, allow me simply to direct your attention to this week”s Universal percentages. Only twice as many downtrends as uptrends. More uptrends than flats. The best we”ve seen since I began tracking them.

This doesn”t necessarily imply further improvement ahead immediately — the recent improvement could just as easily attract another round of selling. But I think it does mean another round of selling would be that much more assured of recovering, for having originated from a position of strengthening.

Enjoy!