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I developed analytical techniques that are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. I primarily apply my technique to analyzing S&Ps, generating several round-turn candidates daily. The methodologies are also applied to... More
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  • Watershed Week For Marijuana Stocks

    I cannot stress enough what a watershed week this is for the Marijuana sector. Notice today's bigger performers, and the laggards. Can you see any common characteristics?

    Many of the bigger performers are double-digit stocks. Meanwhile, the supposed leverage of being a so-called penny stock doesn't seem to be so beneficial. That's quite a switch from earlier updrafts in the industry.

    This week marks the obvious entry of institutional investors into the fray. Watershed, indeed.

    Fiduciary standards generally prohibit the market's largest participants from buying stocks that are illiquid, unproven, or controversial. Until this year, only one or two in the industry were trading in double-digits.

    Think in terms of the Groucho Marx retort, upon rejecting the invitation to join an exclusive club: "I wouldn't want to belong to any club that would have me as a member." The shear size of any one institution prevents it from considering even a single purchase, not when its exposure can represent a big portion of the sector's liquidity. Now the sector's market cap has grown so large that it doesn't need any single institution's participation to support it.

    Marijuana stocks made dramatic upward moves in January as Colorado's merchants began operating. That attracted a great deal of retail buying. Penny stocks were big performers. This week's performance among higher priced stocks tells us there's a new buyer in town. And a new degree of respectability.

    Disclosure: I am long CANN, PHOT, EDXC, MCIG.

    Mar 05 2:09 PM | Link | Comment!
  • Obama Comments Could Start Another Bowl Ralling In Marijuana Stocks

    This weekend brought a couple of interesting developments for the marijuana theme. First, and not necessarily jokingly, is that both Super Bowl competitors come from the only two states to have decriminalized marijuana. I don't know which team brings it, but I smell a 42-0 blowout in the air.

    On a slightly more serious note, President Obama being interviewed in The New Yorker encouraged marijuana legalization.

    The Super Bowl news has no direct impact. But it's sure to be referenced next weekend, and every reference is a step closer to normalization. Obama's interview comments, however, are reminiscent of Eric Holder's August 11 speech to the ABA. It was widely interpreted as signaling DOJ's intent not to interfere with recently passed state decriminalization statutes. Several higher-profile marijuana stocks gradually rallied as the news dissipated.

    Holder's comments snuck up onto a market that had only pockets of euphoria following the states' votes. Obama's comments will hit Tuesday's market following widespread rallies among every sector participant. Most of the rallies were measurable by triple-digit percentages. Even companies that had no more than a press release mentioning marijuana were surging. It was silly. But that leg peaked a week ago, and many of the New Year's rally premiums have retraced a healthy 50% or more of their surges. That makes them vulnerable to resuming their rallies.

    So, if the interview doesn't incite noteworthy rallies among marijuana stocks on Tuesday, then that should be considered bearish. That's how likely it is to have a bullish reaction. Stocks that have maintained their first day's reaction by week's end are probably self-qualifying as legitimate sector participants.

    Following are several charts within the sector. As a reminder, let me state again in no uncertain terms my hatred for so-called penny stocks. From their Mack Truck sized spreads and illiquid environments, to their legacies of hype and manipulation. No opinion can be better than the chart data's integrity. There's also something both unnerving and off-putting about calculating price levels in tenths of a cent.

    As another reminder, let me repeat that I am a technician, analyzing only the chart. Open, high, low, close and volume -- my opinion is exclusive to those data and to the patterns they may form. My opinion does not speak to capitalization, revenues, expenses, competitive factors, etc. Average volume must have set a pace that enables a more reliable price discovery, as opposed to sporadic volume that may be prone to manipulation. Trading history must also be so extensive as to include enough separate cycles, and not just a brief or consistent trend.

    Finally, I currently own three stocks in the sector (EDCX, MCIG, PHOT) whose charts were the most attractive to me at the time of purchase, and their stories made sense. None of which is to be misconstrued as a recommendation to purchase any of these stocks, now or ever.

    The following coverage is presented alphabetically. The "recent upleg" is provided as reference for the sort of elasticity each stock is currently absorbing. The first pullback limit ("pb limit 1") is the optimal endpoint before launching a subsequent upleg. Closing back under the second pullback limit ("pb limit 2") would suggest much more delay before rallying again, if ever. Closing above the "continuation" level on expanding volume should be noticeably obvious that a new upleg is underway. The "pattern" type is in reference to my own labeling, which may not share the mainstream definition.

    Coverage accompanying 1-21-14 article

    Disclosure: I am long EDXC, MCIG, PHOT, .

    Tags: EDXC, MCIG, PHOT, Marijuana
    Jan 21 7:46 AM | Link | Comment!
  • Put This In Your Pipe And Smoke It.

    This week's hottest sector might be a warning about the broader market.

    [Note: I published this article on my blog yesterday morning (Thursday) about the recent run-ups in marijuana stocks. When their topping has become obvious -- as it will -- I will begin calculating pullback targets for many of the marijuana sector's stocks. Email me at to be on the distribution list for this report.]

    Thu Jan 9 2014 -- I've heard (ahem) that marijuana can heighten some people's anxiousness. Marijuana stocks should be affecting you that way right now.

    I'm not dismissing their recent performance. In fact, despite my intense hatred for so-called penny stocks, I began buying several over the past two months. And not as flyers. A subscriber asked me to review several that he had uncovered, looking for entry prices and targets.

    When this sector started catching fire last week, I began looking out for a day like today. And today has come.

    "Today" is the day that the double-digit gainers are becoming more populated with stocks that traded perhaps several hundred shares daily until this week. A couple are doubling or tripling (just checked their quotes, now only doubling again) on nothing more than a press release announcing their entries into the industry.


    I'm not dismissing the sector, and will hold my positions and add to them on a pullback (PHOT, EDXC, MCIG -- all of which may currently be sorely in need of corrections). One of my favorite charts was MDBX on a pullback to 12 for a rally to 50 -- it hit 10, surged above 90, and now is testing 50 as support -- but I stayed away because of the founder's questionable history. My point is that the time for a pullback may be arriving now.

    And not just in the marijuana sector.

    Notice how the broader market began peaking as the marijuana sector began surging. Of course, that coincided with the January 1 legalization date in Colorado. But that date was well-known. The sector's outperformance was as much a warning that the broader market no longer offered so many opportunities.

    Now today's "press releases" are inciting doubles and triples, while some of the marijuana sector's early performers are hesitating. Even the sector is rotating out of its own leadership.

    I tend to compare the market's uplegs and downlegs to the game of Musical Chairs. The marijuana sector's sudden surging indicated that fewer chairs were available. Now surging on little more than a press release suggests that even fewer chairs remain.

    That doesn't mean the music has stopped, but it does mean we should be listening closely.

    Disclosure: I am long PHOT, EDXC, MCIG.

    Jan 10 7:47 AM | Link | 6 Comments
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