Bigger Picture

It”s not a bloodbath! Stocks are only mixed. But there is still information to glean, from CBGI and SPLI”s dips, to VAPE”s blips. And we need to begin strategizing ahead of tomorrow”s lift on PHOT… Let”s open today”s Livedesk at 11:45am ET. See you there!

A lot of busy PR departments last night in the marijuana sector. Oh so rare to see one or two releases before the open — nay, before 10;30am. PT. Not after yesterday. A quick count at this moment show 14. It”s reminiscent of Senator Schumer”s comments to then-Chairman Bernanke in open hearing, “Get to work, Mr. Chairman.” The market subsequently rallied. Let”s see how our stocks do today with their PR departments having gotten to work. Hint: Not doing well would not be good.

Today”s filter is… grown-ups, and tipping points.

Not a great day in the marijuana sector yesterday, not a great day. And not just for its stocks.

When one of our stocks is down, our first tendency as traders is to look for news that might be causing it. A distribution problem, or unforeseen dilution released in a 10-K filing? Those are specific to the company or to the stock. What about elsewhere in the sector such as a trading halt, or is the broader market shunning momentum stocks?

Let”s check the local news, shall we.

Surely, most everyone reading this are already aware of the two Colorado fourth graders that were busted selling pot at school. People that can”t name a single marijuana stock still know the story.

People that can name a lot of marijuana stocks are aware that the FDA is proposing regulations for the e-cig industry. Who wouldn”t think that was coming. It is inevitable.

Those are just yesterday”s stories. Since decriminalization and legalization, the press has given a higher profile to stories of marijuana misuse and abuse. Over-consumption of pot brownies, children getting into their parent”s stash, fourth graders trying to make a living in a stagnant economy. These stories get a higher profile, because there are more instances.

Maybe ground zero for the marijuana industry being in Colorado has created a “wild west” perception of the stock sector. Get real. 

Some of the stories may be direct hits on the industry, such as regulation which at least adds to operating costs. Those hits are easier for stocks to recover, albeit not until after taking the hit. 

But the anecdotal stories of societal impact are trickier for the sector to navigate. Its growth depends upon an atmosphere that allows political support to pass legislation in more states. FDA regulation improves those chances. Stories of misuse and abuse do not.

Those stories threaten stock valuations on the margin — not directly impacting operations, but impeding revenue growth. Stocks soared earlier this year when the focus was on scaling the Colorado experience nationally. Stocks fell recently in part, and yesterday to some degree, because of the opposite news cycle.

I don”t partake — not even after yesterday”s market experience — but that doesn”t make me see the lines of personal responsibility less clearly. Stocks don”t see those lines at all. Wherever it may originate, Impact is impact. The only preparation for it is to know it will come from time to time, and to know that stocks will absorb it and move on.

[I am so sorry for the delay but my video wouldn”t upload with any of the usual methods… Click here to view it]

In Thursday”s recording of Open”s Interest, I review Wednesday”s not-so wonderful session, discuss several other stocks of interest, and then introduce two new stocks with actionable parameters. My message remains this: This week”s dips among so many in the marijuana sector still appear to be temporary corrections, and not the beginning of a new downleg. Anyway, we should know soon enough…
Enjoy!

ERBB Tumbled to a fresh low after we discussed it during the Livedesk.

ENRT Late dip to support wasn”t optimal for buying more.

SPLI Last-minute plunge met the next target and reversed up sharply.

ATTBF Close was testing a critical support, not yet breaking it.

EDXC Essentially unchanged from entry point.

GWPH Second round of buying Wednesday, but still a correction.

FITX Symmetrical Triangle pattern suggesting a reaction down.

VAPE Not a “falling knife” to try catching, but still monitoring.

FSPM Recently introduced 2.60 parameter, which was met and held.

TAUG Struggling at a critical support, might buy intraday recovery.

TTDZ *NEW* Breakout — would buy .033 pullback for .072-.087 target.

MINE *NEW* Continuation — would buy pullback to .0195 for .039-.048 target.

Livedesk at 2:15 ET… Be sure to check the prior post”s thread for earlier comments regarding portfolio holdings or other stocks…