Filter THIS! Evolution.

Today”s one thing is… Evolution.

“Survival of the fittest” is used often in reference to Charles Darwin”s evolutionary theory. The phrase actually was coined by Herbert Spencer, upon reading about “natural selection” in Darwin”s “Origin of Species”.

Survival of the fittest, natural selection, whatever.

We”re witnessing our own little accelerated experiment among marijuana stocks. One thing I”ve said here during the past several weeks — during the sector”s pullback — is that not every pot stock will participate in the next upleg. Falling stocks has the cathartic effect of forcing buyers to look a little more closely at the horses they”ve been backing. Upon closer inspection, some companies will attract more buying at cheaper prices.

Similarly, other companies will lose support. And their falling prices will fuel a self-fulfilling prophecy that attracts sellers simply for the sake of selling. Occasionally, even these stocks will “dead cat” bounce (pardon the graphic, but the term is based on the suggestion that even a dead cat falling from a window sill will bounce). That”s not less evolutionary, since those falling stocks become the beneficiary of environmental changes — namely, running out of sellers and becoming underpriced, even for their own pitiful futures. So they bounce to levels that attract sellers again.

Capitulation and bottoming can resemble a dead cat bounce, in that it is a messy affair at first. If this week is marking a low in the marijuana sector, then some of its stocks will start taking the lead in recovery. Others will follow, despite initially lagging. Be careful not to confuse those with the losers.

Sadly, “survival of the fittest” can also apply to traders and investors that were unable either to sidestep the sector during its decline, or who were forced out before its lows. No stock coverage service can advise individuals on their own portfolio allocations. But we can point out the harsh reality that this is part of the market”s evolutionary process, and inflicting the greatest pain can indicate a price extreme.

To quote my own blog post from one week ago today, writing about the market as a mass psychology lab: “The better students realize early that they are also the subjects. Their fear is the market”s fear. Their extremes are the market”s extremes. When they accept that they are part of the market, their vantage rise above the market, and have the best vantage point of all.”

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?