The Market Dumps

 

Dailies

The SPY, QQQ, DIA, and XIC ETFs on freestockcharts.com

While some investors have been freaking out, I’ve been casually checking the market and my portfolios. Is this the correction I’d been impatiently waiting for?

Looking at the daily charts of the SPY, the Qs, the Diamonds, and the XIC, you can see a few major things happening here. A big precipitous move often creates another one. Look at the XIC on Monday, Jan 29. It gapped down and just kept going. Something similar happened to the Dow on Tuesday. While there was some defending going on, it still broke its trend on Friday. The SPY and Qs had a huge down day like the others on Friday; however, their uptrends are still intact. It will be interesting to see if there’s a bit of a bounce before these go down even more and break their shorter-term trends.

 

Weeklies

When we pan out and inspect the weekly charts, it’s hard not to notice the glaring red candle on the XIC. Whoa, Canada! In one week, it wiped out all the gains made since mid-October. The other charts only came down past the gains from the last week or two. If this is the start of the move down for the US market, it might be wise to take some profits off your US stocks before they correct even further.

Monthlies

As for me, I’m just hanging onto everything and waiting for my next buying opportunity. In fact, I transferred more cash into my registered accounts so that I’ll be ready when I see a good trade is on.

I’m noticing some beautiful monthly corrections on the weed stocks. You can bet that I will be scaling into these before their next big move. If you have difficulty selecting which weed stocks to buy, then just buy the ETF, HMMJ. You can visit this link to get more information on the fund and its stock holdings. I created a watchlist on freestockcharts.com with all the stocks that are in the HMMJ ETF. I like to cruise through the charts and check out which ones are helping the portfolio or weighing it down.

The Transparent RRSP: Portfolio Choices

The Week of Oct 2
  • Over the weekend, I deposited $150 into the RRSP. I will have $328.22 in cash in the account as it takes a couple of business days for the transfer to show up in the account.

September was a bit of hectic month for me. Other than scaling into THCX.V, a stock which I already owned in my TFSA, I didn’t do much in the portfolio department. Sometimes you just have to take care of other business before you can properly take care of the business.

Last week, I finished the Trader Training Course with the Canadian Securities Institute. The night I found out I passed, I immediately signed up for the Technical Analysis Course. Even though I read charts all the time and dream about them in my sleep, I always like to read up on the basics. The text and course have been recently updated and I must say, I’m pretty impressed so far with the really clear explanations. I’ve read a lot of other books on technical analysis and this one is the best one yet. It better be because it costs A LOT more!


Now that I will have more cash, I’m considering buying more shares of ZPR. Check it out.

ZPR

Price chart for the ZPR ETF on freestockcharts.com

In the summer, I was curious to see if this would continue trading sideways. It still is, but it could be starting to break out. The worst that could happen is that if the market turns, this one will too after I enter, but I don’t really care. They say you should never have a bias when it comes to your investments, but I can’t help but like this one. I have shares of this in my TFSA as well.

Since it’ll take a couple of days for me to have the other $150 in this account, I’ll put a limit order in for 15 shares on Monday (tomorrow). Once the other cash shows up, I’ll get more. We’ll see how it works out.


Some More Stock Picks

I like the monthly charts for the following stocks:

  • CPG.TO
  • WCP.TO
  • ERF.TO
  • EFN.TO (This one needs another week or so to set up better.)
  • ACB.TO (This could use another week or two to set up.)
  • EXE.TO (I already own shares of this. It needs to tighten up, but I’m watching this one closely.)
ACB

Price chart for ACB.TO on freestockcharts.com

ACB is interesting because it’s a young stock. When you don’t have much to go on for the longer term charts of the weekly, monthly, and yearly, then you have to look shorter term and rely on the daily, hourly, or even shorter intraday timeframes (30 min, 15 min). It becomes more of a risk when you have less historical information to make your decisions on. In these situations, you just manage your risk accordingly. Even though it’s a cheap stock, you might want to buy fewer shares. As time goes on and you have more information and encounter better setups, you can always buy more shares.

I say this because I normally wouldn’t enter a stock that has gone up for six straight weeks as seen on the weekly chart. It would have to have an amazing monthly chart, which this one doesn’t yet because it’s still new. However, the daily chart is great in that is has a lot of trade volume supporting its most recent uptrend. What’s also attractive about this uptrend is that it’s had four pullbacks testing the trendline since it started in late August.

I’m a little hesitant to buy a new weed stock for the RRSP, but I think I will take on a few shares of this for my TFSA.

As always, do your necessary research and only risk what you’re comfortable with!

 

 

 

 

 

 

 

Your Special 4/20 Newsletter of 2017: Medicinal Stocks

“What weed stock should I buy?”

If there is one question I am asked the most, it’s the cannabis question. I’m asked about this more than whether to buy Facebook, Apple, or Lululemon. I don’t know anything about cannabis strains, but I can speak a bit more about cannabis stocks.


2016 to 2017

Last year I posted a newsletter on this celebrated day. I listed a few stocks to check out:

  • Canopy Growth Corporation | Ticker symbol CGC.V | $2.60
  • Aphria Incorporated | APH.V | $1.56
  • OrganiGram | OGI.V | $1.10
  • Mettrum Health | MT. V | $1.66
  • Emerald Health Botanicals | EMH.V | $ 0.17

This is where they’re at now:

  • Canopy Growth Corp.| Ticker symbol now WEED.TO on the TSX | $10.24
  • Aphria Inc. | APH.TO now on the TSX | $7
  • OrganiGram | $2.87
  • Mettrum Health | It halted trading at $7.05 because it’s merging with Canopy Growth Corporation
  • Emerald Health Botanicals| $ 1.54

WOW.

I wanted to buy all of them out of pure excitement, but at the time, it was a decision between me and JP. We decided on Aphria, mainly because of its price and proven earnings.


Cannabis presents a new industry for the public, and it’s still in its early stages as it’s working its way through various long and rigorous legalization processes. You can’t expect this journey to be straight and easy, but it’s going to happen whether you agree with legalization or not. (Interesting personal observation: Among the people who ask me what weed stocks to buy, half of them are very conservative and would never smoke it. The other half smoke it and still have shown no indication of buying any of these stocks.)

I remember the time when Colorado and the few other states were legalizing. It was impossible to tell which weed stocks to buy on the US exchanges. They each had the patterns of the new publicly traded company in a speculative industry: cheap with wild swings in volume and price moves. I had to wonder if a company was going places or was just another pump and dump.

I watched a lot of media coverage on Colorado. There was definitely a saturation of industry players – in other words, too many suppliers. Some went just as quickly as they arrived. The stronger, more resilient, established, and adaptive ones survived and endured. Others joined forces and resources to become bigger companies. It will be interesting to see how the industry plays out in Canada.

I’d purchased a couple of other weed stocks since, both of which trade on the TSX Venture Exchange. I bought shares of:

  • Maple Leaf Green World Inc. | MGW.V | 0.62 and
  • The Hydropothecary Corporation | THCX.V |$2.28

I did a quick search and found other stocks with good trading volume:

  • ICC International Cannabis Corp. | ICC.V | $1.29
  • Aurora Cannabis Inc. | ACB.V | $2.84
  • CanniMed Therapeutics Inc. | CMED.TO | $11.61

Oh! And I love that Horizons has created a new ETF: Horizons Medicinal Marijuana Life Sciences ETF (ticker symbol HMMJ.TO, $10.80). It’s got a wonderful mix of medicinal cannabis stocks from Canada, the US, and the UK, including one of my portfolio darlings, Aphria. It also owns some of the stocks mentioned in this newsletter so far. At some point, this ETF will start paying distributions (none yet). If this is a long-term investment for you, then you might want to hold this in your RRSP to avoid withholding taxes.

There are a few things to note about Canadian cannabis stocks. They’re inexpensive and they all overreact to any cannabis information that comes out of Trudeau’s mouth. They settle down after the market reaction to any news and shape up again for more investors to get on board before the prices go up for another run. It’s generally been run after run at higher and higher prices.

Most of these stocks trade very similarly to each other, with only their prices and trading ranges that might differ. If your stock isn’t moving like the others, you might have to wait longer to better see whether or not it’s a dud before getting rid of it. It also might just be a company that needs a lot more time before it proves itself to the market.

If you’re considering buying shares of cannabis stock, you’d have to look deeper into the company’s fundamentals. Remember, because they’re new and in their early phases of development, they all promise growth. I would pay most attention to company earnings and pick the one generating profits already.


The Cannabis Industry vs. the Market

Without trying to sound the alarm, I will strongly suggest that I feel that the market is going to have a major correction soon. The market had a huge nine-year run. We’re now facing rising inflation rates, a new US president, and heavier selling volume in the market as of late. Major stocks that had a good run outshining the market, are showing signs that their investors are now being cautious, even uncertain.

As proactive investors start to unload their positions, they’ll be executing their defensive plays (getting into utilities and consumer staples), as well as looking for what is trading on its own page and less affected by market moves. I think that cannabis stocks, given their industry newness and lower prices, will provide that opportunity for investors.

You might feel conflicted about cannabis and if you do, then you should probably feel the same way about alcohol. As we all know, booze was once outlawed and look at it now. The same will happen to weed. They say if you can’t beat them, then join them. What’s nice about a cannabis stock is that you don’t have to smoke it to own it.

 

 

 

 

Your Special 4/20 Newsletter: Medicinal Stocks


v2 420A friend’s mother once asked me and my man what would be a good cannabis company to invest in as she wanted to buy stocks of that sort. This question caught us off guard–it was almost as if this sweet retiree was asking us where she could get good weed. She clarified that she wanted to invest in a company that was mainly in the business of medicinal cannabis. Oh medicinal! But of course. Her interest came about after Colorado and Washington legalized marijuana use. T
his is actually a question I get asked a lot as more people anticipate widespread legalization. I’m sure many other stock investors are asked about cannabis companies frequently, or at least from time to time (right?). For any new and exciting industry, who doesn’t want to profit from getting in early? With all the talk of legalization in Canada, the stigma of marijuana’s medicinal and recreational use will fade, or at least its reputation will be less shady. If and when this happens, you’re better off having seized such opportunities sooner than after the industry has boomed and the stocks have become more expensive.

The research we conducted for ‘Ma’ was actually difficult because many of these cannabis companies looked similar to one another. Many of them were a bunch of small businesses that came together to form a larger company; many outlined plans to dominate all corners of the cannabis market from production and retail to medicinal research and pharmaceutical use; most were quite new in the stock market; the stock prices were cheap and in similar price ranges; and they all promised expansive growth–in both the corporate and hydroponic sense. There is typically more speculation with younger companies; what’s interesting is that many of these cannabis companies are in a newer and developing industry that is slowly gaining acceptance and becoming incrementally less illegal.

As one who looks at a lot of stocks, I am always suspicious of hype and headlines. This is because I often find that by the time the news gets announced, it’s too late–the best buying opportunity has passed. Before I buy any stock, I like to look for clues first within the sector and the economy. Is the hype over? Is there an important upcoming meeting or announcement by the government that will affect this sector? Is the sector more stable and less volatile than the overall stock market? Or is the sector overheated and likely going to experience a bit of a sell-off? Will a company be announcing its quarterly earnings soon? I consider these things in addition to checking out a company’s fundamentals that point to a solid foundation, such as healthy financial data, plans for future expansion, and developments in products and services. Then I check if a company’s stock price has stabilized and I try to anticipate what might be a good price to get shares at in the near future. 

There are many cannabis companies in Canada. I took a look at some companies that trade on the TSX Venture Exchange (the stock exchange for newer and smaller Canadian companies):

Canopy Growth Corporation | Ticker symbol CGC.V | Price per share at today’s open: $2.60

Aphria Incorporated | APH.V | $1.56

OrganiGram | OGI.V | $1.10

Mettrum Health | MT. V | $1.66

Emerald Health Botanicals | EMH.V | $ 0.17 

I’ve got my eye on a couple of these companies. I won’t buy too many shares, I don’t want to risk much, but like Ma, I don’t want to miss out either. I’m willing to risk a bit of money to hopefully enjoy significant gains later. Before the end of the trading day today, on this celebrated date of 4/20, I will probably buy my shares of legalized cannabis.