Pot Stocks: Three Ways to Trade a Modern-Day Gold Rush

Pot Stocks: Three Ways to Trade a Modern-Day Gold Rush   The marijuana story is taking the world by storm.   Canada will legalize it in October 2018.  U.S. states are pushing for further acceptance. Polls show that Americans highly favor its legalization at 61%.   Corporate America has woken up to the opportunity.   In fact, Coca-Cola may be looking to get into the pot-infused drink business.  Beer companies like Constellation Brands just invested $4 billion in Canopy Growth.   Related stocks have exploded over the last year.   Canopy Growth (CGC) ran from $12 to $57 Tilray Inc. (TLRY) ran from $30 to $300 OrganiGram Holdings (OGRMF) ran from $2.25 to $6 Aphria Inc. (APHQF) ran from $$7 to $17 Marijuana ETF, MJ just ran from $26 to more than $44   All of these are still great opportunities by the way.  Even TLRY, which just did this:     And unbelievably, there are stocks that are still dirt cheap with significant upside potential.   By 2030, marijuana sales could eclipse Soda Sales   We’re seeing signs of a modern-day Gold Rush in marijuana stocks.   Analysts say that by 2030, pot sales could eclipse U.S. soda sales.……

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Summertime Blues (GS)

Summertime Blues (GS)   OK, so it was the Fourth of July, and a lot of folk took leave from the markets, but does that really explain it? We’re talking about a significant decline in trading volume that occurred at the end of last week amidst a market rise that now, on second glance, is looking wafer thin.   Oh…?   Yes, a great number of the leaders advanced, including the FAANG crowd and their associated partners in crime, Microsoft, Nvidia, Qualcomm and Cisco, among others – and Facebook even logged an all-time closing high.  But as mentioned, it looks more and more like those big names are churning, with a number moving straight sideways on diminishing activity.   Have a look – So what’s it all mean?   Time will tell, of course, but it appears we’re preparing for a summertime doldrum to set in before earnings season, a kind of “sell in July before we head to the sky” phenomenon.   So there’s more “bull” to come?   Yes, we haven’t given up on the bull market yet.  We hold that there’s a ways to climb before sentiment levels are truly slap-happy, and the majority of the country…

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The Denizens of Intelligenz (WWE,GLD,SO,NFLX)

The Denizens of Intelligenz (WWE,GLD,SO,NFLX)   By definition, exactly half the population possesses below average intelligence.   And that’s not a comfortable statistic.   So who’s the dumb ones?   Well, it certainly doesn’t break down on socio-economic lines.  Don’t think, for example, you got smarts because you got cash, Giles.  It don’t work that way.   And intelligence, by the by, we don’t measure by how many letters you have trailing your name, either; academic credentials have absolutely nothing to do with a person’s ability to intelligize, if you’ll permit us some new coin.   Brains in the Service of Life   Rather, intelligence – as we read the dossier – has everything to do with an individual’s ability to respond to whatever predicament he encounters, and to navigate it successfully.  That may be a business deal, an unexpected visit by the ‘authorities’, a crisis in the street, or anything else that might befall a person in the course of his or her life that generally tests what we would call his ‘survivability’.   Because it clearly does not behoove a man to be the planet’s best trial lawyer, or essayist, or jet pilot or code writer if, when…

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Behind the Scenes and Under the Radar (SO,NFLX,FXI)

Behind the Scenes and Under the Radar (SO,NFLX,FXI)   It’s a political world, friends.  Has been for a while.   Everything that’s done or said or written these days, it seems, is employed to further an agenda.   Truth be damned, is what it’s all about; let ‘the story’ carry the day, whatever it may be.   If it makes me look good, so be it.   If it makes him look bad, so be it.   If it makes my team more popular, so be it.   If it hides my wrongdoing, so be it.   All that matters is that it’s done artfully and remains undiscovered.   Because truth is relative.   And if I win, it means my truth is the real Truth. It has become so difficult today to discern between what’s real, what’s psy-ops, who’s the good guy and who’s the criminal behind the lines we’re being fed.  Even what’s at stake and who’s to profit from the stories we’re told is unclear.   And we’re not just talking the world of geopolitics, friends.  The markets are equally drenched with stories that don’t hold water. Take, for example, the following –   As we come…

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Oil vs Wheels (IYT,USO)

Oil vs Wheels (IYT,USO)   It’s the interplay between the following two factors that we’re keeping our eye on these days, the better to apprehend the market’s immediate trajectory: oil and ‘market leaders’.   We’ve discussed this combo before, and how they work together.   The ‘leaders’ are the current sexy tech group, not related to oil directly, being themselves more a gauge of investor sentiment toward equity investing in general.  The transport stocks, too, are leaders; as a group they indicate where equities are likely headed, because shipping arrangements have to be made well in advance when new orders arrive at the factory.   In fact, shipping details and contracts are normally finalized anywhere between one and six months prior to industrial orders actually being produced.  And that advance warning gives us some lead time into understanding market direction over the intermediate term.   That said, the whole ball game gets thrown a curve when oil prices are in flux.  As the sector that’s most reliant on energy inputs, transportation stocks can be thrown into a tizzy when crude futures are trending fast. When they’re stable, of course, the game is a whole lot easier to play.   So…

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Movie Lover’s Intermission (NFLX,JPM)

Movie Lover’s Intermission (NFLX,JPM)   If there’s one thing we’ve come to rely on over the last couple of decades, it’s the resiliency of tech – or at least the resiliency of the tech investor, a love junkie so consumed with his heart’s one desire that he keeps coming back – even after taking repeated beatings. We don’t make this stuff up, folks.   The dot.com bubble burst at the turn of the century; the Lehman Bros. debacle squared big tech (along with everything else) a decade back; and over the last year, we’ve seen several dumps of between 20% to 30% on all the FAANG stocks.   But does anyone care…?   Tech investors seem nonplussed.  They’re a loyal lot.  And that’s fine.   But we here at The Modern Bull are somewhat different.  We don’t have a great deal of hope for the longevity of things tech-y, but we do view them favorably as vehicles for robust and profitable trades.  Hence a company like Tesla, for whom we bear no love whatsoever, we still view as a high beta means of realizing our financial goals.   That said, there are now several reasons to be worried about big…

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Profit Gobble (NIB,DBC)

Profit Gobble (NIB,DBC)   A farmer friend of mine says he wouldn’t be in any other business.  He raises beef cattle, chickens (for eggs) and has a small herd of dairy goats, and he’s convinced that it’s an enterprise that can’t fail, regardless the economic forecast, if things are managed properly.   And we’d agree, though we might quibble with his product line.   In the end, though, it’s true; there’s no escaping that we all have to eat.  Some are willing to survive on junk, of course, while others are a little more discerning.  But when it comes down to how your last dollar is spent, food is where it’s at.   Apparently farmer-boy has a point.   Our Four Gs investment strategy long ago recognized the need to put eggs in the investment basket.  Diversify if you want – and better you should! – just be darn sure that you got some genuine eggs in there! And it’s with precisely that in mind that we turn to the food sector for today’s trade.   We start as follows –   Commodities are experiencing an upturn. And it’s not just oil that’s rising, friends, though energy gets the bulk…

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Long Wash Cycle (TLT,SLV,XLB,XLK)

Long Wash Cycle (TLT,SLV,XLB,XLK) Intermarket analysis is a helpful tool for the technical trader attempting to anticipate the next big move in the investment universe. What is it, exactly? Well, over time, certain cycles are evidenced in the movement of stocks, bonds, commodities and the dollar, with associated relationships also seen between Emerging Market debt and equity, as well as in the play between large and small cap stocks. In general, however, the main body of evidence points to 1) rising commodities (and a falling dollar) preceding 2) a turn lower in the bond market, followed by 3) a retreat in stocks. That is, when inflation is driving the cost of raw materials higher, interest rates are eventually forced upward, pushing investors out of their fixed income holdings and ultimately equities. It should be noted that the process is anything but clean, meaning it takes place over the long term, and is accompanied by rolls and rises in each asset class, such that it can best be seen only with a wide angle lens and often only after a significant time span has elapsed. Attempting to time one’s investment shift decisively out of one asset class and into another with…

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The Nutella Market (XLB,XLK,TLT)

The Nutella Market (XLB,XLK,TLT) There’s very little in this world that can compete with thickly spread Nutella on a crispy rip of focaccia. Hell, just dip that sucker into your oversize jar and give her an uncaring hack-snort swallow… And let the goop fall where it may. Is that life, or is that life? I’ll say… Unless, of course, you keep it up for too long, and it sends you to the oncology ward with a prep for chemo. Don’t Do It! The market has begun to act as if all is sweet and simple again, as if a dollop of the Ferrero hazelnut-cocoa genius was already stuck to its palate, blood-glucose levels were frenzied and a titanic insulin shock was fast approaching. When you see the biggest names on the street hitting new highs, or coming to within a whisker of their records, you know that it’s only a matter of days before the next spasm of buying is upon us and the indexes, too, begin logging all-time bests. This is the phase when rational discourse is abandoned, trust in the past and all it has brought becomes a religious tenet, and money is thrown fastball style at the…

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“Bond. Lamest Bond” (TLT,QQQ,USO)

“Bond. Lamest Bond” (TLT,QQQ,USO) We’ve been talking about the end of the nearly 40 year bull market in bonds for some time now. Indeed, we’ve been early on a couple of occasions explaining the case for its demise, even errantly putting our money where our mouth was. We admit now we were early, eager and foolhardy. It happens, sometimes. Part of the business. Yet today, with all signs again militating in favor of just such a rollover, viz. a rising rate regime, a Fed that projects its intentions to continue tightening, a bond market that appears to be accepting the threat, and both the inflationary and corporate earnings backdrop to support it, we see there are still some who are unable to swallow the case for a coming bear market for bonds. Case in point: Morgan Stanley, no newcomer to the world of Treasury investing, turned bullish on the long bond less than a month ago. In a move that’s astonishingly contrarian, the bankers at that esteemed outfit claimed that “trade tensions, declining equity markets and subdued inflation” are forcing it to recommend clients bulk up on the ten year note. We would be all in favor of Morgan Stanley’s…

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