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Filter THIS! Already? – If, Then… Market Timing

Filter THIS! Already?

By Rod David | April 10, 2014 - 8:18 am

Today”s one thing is… Already?

Marijuana stocks have enjoyed a good couple of days. Not all of them, and not all of them on both days. Some of the two sessions” bigger performers were only bigger performers on Wednesday, and big underperformers before that.

SPLI had dropped about 75% from its high two weeks earlier, and it rallied about 70% from Tuesday”s low.

HEMP had dropped 80% from its high two months earlier, and part of that was contributed by Tuesday”s decline to new lows. It rallied 33% on Wednesday, which is up 55% from Tuesday”s low.

REDG was also down about 80% in a week through Tuesday”s low. Wednesday”s high doubled from Tuesday”s low. Close-to-close was up 40%.

Granted, each of these examples had risen much more than they dropped. In fact, each drop tested a Fibonacci retracement that would qualify as a bottom — if those lows were to hold a retest.

That”s kind of the problem. It”s not a bad problem to have, but many of the sector”s stocks require a retest of this week”s lows. And the volume accompanying many of their bounces this week was down from levels accompanying the drop.

The real problem is that the SPLIs, the HEMPs, and the REDGs of our sector rallied so sharply. Already. That shouldn”t be the case at the bottom. Not that their lows” retests should fail, but their actual recoveries should lag. Instead, very short-term buyers are already buying. Many have already started selling. 

This behavior is inevitable. Getting it out of the way sooner rather than later can be healthy. Meanwhile, the outsized outperformance of such underperformers suggests that the first bounce is much nearer to ending. At least, that the opportunity to retest recent lows, for the market to validate, to build better bases — that opportunity is getting much closer. Already.

Filter THIS! …is a pre-open 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?
Posted in Bigger Picture