Filter This!

(Posted simultaneously to the Activity Feed)

We”re halfway through the first week, and features are still being launched… You”re now reading a pre-open missive that tells you one thing, the most important thing, if you had to filter your view of marijuana stocks price action through just one thing (okay, sometimes two) — what would that one thing be?

Today, that one thing is “patience.”

A lot of stocks peaked yesterday into a “Three-Day Surge” setup. Its resolution is so surprising, because it catches so many people thinking the exact opposite, since so many people were so recently DOING the exact opposite. The good news is that stocks don”t tend to attract that much buying interest without justification. The bad news is that justification might be largely reflected in the price.

Three-Day Surges resolve in all sorts of ways. Some take quite awhile to recover and resume their rallies, some bounce back quickly. Some never do, as the third-day reactions can be very cathartic, forcing buyers to look more critically at the sector and discover some pretenders are among them.

So, today, filter this: An indication of a stock”s underlying strength will be how quickly its rally resumes. But even the strongest need/deserve a few days of rest before kicking it back into gear.

I”ll be monitoring for pullback targets, and will get those to you as patterns allow them to be calculated with confidence.