Before the Bell Nov 9

Tickers:  Cannabis Review, Market Posture Review, Trade Ideas

Before the Bell  is premarket prep for active traders. The note provides detailed stock market technical analysis focused on the indexes and FAAMGs. Key levels and trading locations are provided, along with trading plans and timely commentary to keep you on the right side of the trade.

Earnings 

Companion Video  

Will return tomorrow.

Macro Data Releases Week of November 8

  • Monday – Clarita and Powell both speak today but nothing much expected
  • Tuesday – NFIB small business optimism index, FOMC Bullard, PPI final,  10 year bond Auction 1pm
  • Wednesday – CPI, Jobless Claims, ATL Fed inflation expectations, Oil Inventories 10.30,  NatGas inventories noon  30 yr bond auction.
  • THursday – Veteran’s Day. Governmental Offices will be closed but Market will be open
  • Friday – Consumer Sentiment, JOLTs

Did Cannabis just Bottom? 

Marijuana’s Moment may have just arrived. 

Yesterday saw igniting candles all over the cannabis space as a Republican’s revealed they are sponsoring and developing a Cannabis reform bill. Previously it has only been Democrats pushing the idea.  This is viewed as a major development for the space as the likelihood for finding compromise language is greatly increased.  Read more with links to related info  HERE 

  • Below is a chart Review of the main players in the space

Indexes and FATMAAN Charts

Yesterday was primarily a consolidation day in the indexes and mega-cap tech.  Elected to spend the time in other areas this morning.  The pivots for these names / charts are the same as yesterday. You can watch yesterday’s video / blog post to refresh if necessary.

Market Insights

Texas Hedge / Risk Reversal

Risk Reversals can be one of the bullish trades done in the option market. It’s when you SELL downside PUTS ( premium credit ) to fund the BUYING of upside CALLS ( premium debit ). They are spectacular when they work because of the increased leverage of having a PUT expire worthless while you Calls explode in value.  Of course, if price goes the other way, you’re destroyed.  The graphic shows how the market is collectively positioned.  THe amount of call buying has increased, but so has the amount of PUT selling.  Great as long as the music keeps playing, but if/when it stops, the option positioning wil force a rapid unwind.  This will accelerate price to the downside.  For is means be hyper-aware of your overall exposure and make sure you’re not way out on the leverage limb.

BuyBacks will average about $2B a day thru Christmas. 

Buybacks will account for about $2B of equity buying each day until Christmas.  Hopefully this would stem a wholesale sell off.

Is this why folks are retiring early?

THe value of stocks held by households has gone parabolic to almost $30T.   Maybe seniors are looking at their IRAs / 401Ks and are deciding that work is more of an annoyance than anything else.

Russian NatGas flows to Germany have slowed to a trickle.

Germans still have time to crochet an afghan or 2 before the worst of Winter sets in.  Having gas and being able to afford to use it are two different things.

The Russell

Have to admit, I don’t like it when everybody is talking about “our trade”.   Keep in mind, a backtest of the breakout is one of the most common technical moves out there. Be open to the idea of a pull back into $232-$234 support.  I think they’ll be plenty of buyers there is the market isnt completely falling apart.

 

Thoughts from Oppenheimer

Ari Wald, Chief TA guy at Oppenheimer sent out this note on Friday. Honestly I have not drilled down on his ideas and recommendations but I plan on it.  Ari does solid work, so if you see something you like and you need a long, size it right and take a shot.

Ford

You’ve got to go back over 20 years to find higher prices on Ford as it begins to breakout. Another candidate for a long, especially if you can catch a little fib pullback. Ari suggests waiting for $17 but you might be waiting a little while for that price. Anyhow, pull up your daily and weekly charts of Ford, lay on your Fib tool and see where a good spot lies.

 

Cannabis Chart Review

Here is a review of some of the bigger, more popular names in the space. 

$ACB

Here I think you can be long against the ema cluster at $7 which should be good support. Otherwise alarm $7.75 for the breakout.

$CGC

Canopy is very weak relative to peers with price still below the 20ema and first resistance. Note the indicators are in full bearish regime mode while other s in the space are at least breaking higher.

$CRON

Buy the recapture of the 200ema at $7 which would open the door to $9

$GRWG

Nice technical set up. Get long on a break above the 50ema at $26 for a move to $30 T1.

$SMG

A pull in to $165 would offer a nice entry for a potential move to $175 T1.  THe nice thing about SMG is that it is a pick n shovel play. As category grows, SMG should grow with it.

$TLRY

There is a line of resistance at $14 with the 200ema just above. Traders can be long against the 50ema or alarm the 200ema. A break above the 200ema opens up a whole new range of upside possibilities

Cannabis ETFs

$MJ focuses on Canadian-based stocks while $MSOS focused on US Multi – state operators.   I prefer MSOS over the other 2 ETF options. I think the multi-state operators will have an easier time with profitability than growers which will be in a constant battle to reduce prices as competition intensifies and efficiencies improve.  MJ is primarily growers.

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