Filter THIS! Fork.

Today”s filter is… fork.

“When you come to a fork in the road, take it.” — Yogi Berra

Nasdaq stocks were already underperforming the broader market during the weeks leading into last week”s top. The Dow Industrials and S&P 500 markets then outperformed by probing new highs last week. They played catch-up (or “catch-down,” as the case may be) by plummeting for the past two sessions.

That”s how the marijuana sector”s current problem began. Nasdaq-type indexes (NDX, Russell) hadn”t joined broader markets in their prior high, either. Then the closely-related Biotech sector began dropping sharply. Speculative premium was getting crushed. 

All of that contributed to my cautious sector posture during the past several weeks. It was only a matter of time, and not much of it. Going all cash Friday might look like a genius move, but even being 30% invested until then was too patient. In fact, I sit here surprised that only five names in our universe suffered percentage losses worse than the teens.*

Sign of strength, or sign that it could still get worse? Can it be both?

Actually, while Nasdaq is still relatively lower, at this moment it is higher. Futures trade electronically almost uninterrupted around the clock. Right now, despite S&P futures probing under yesterday”s low, NDX futures are well above yesterday”s low. This at least improves the potential for a near-term bounce.

I”ll have price levels to consider for buying into renewed weakness, with the assumption of riding a later-day recovery. But it might be a one-day recovery, so “we”re not getting married.” It might be a one-hour recovery, as the broader market remains vulnerable to another downdraft (on steroids).

Market have reached a fork in the road. And they”re going to take it. Otherwise, stick a fork in marijuana stocks for another day, because they”ll be forked. I mean, done.

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?

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