Watchlist for the Week Served with a Side of Caution
The watchlist for the week has several stocks that failed to break down when U.S. equity markets sold off. The stocks that remained above their 20/50d moving averages are noteworthy. That said, exercise caution this week.
Our perspective is one of “show me the money.” Until we see evidence that institutions find these levels too good to pass, we will exercise caution and restraint. Our best opportunities align when institutions are buying and we follow their lead. Forging ahead too early into the breach is not statistically rewarding, so we will wait for clear signs that institutions are buying.
Most of the stocks in this industry group are exhibiting relative strength. As Canadian companies ready for the new law to take effect on October 17, many U.S. companies are gearing up for steady growth in the years to come.
Aurora Cannabis (ACBFF) has been on a run for the past 8 to 9 weeks. Price action is threatening a breakout into an area lacking overhead supply, while the group strengthens. Price action never broke below its 20d, when everything else fell apart.
We’ll add ACBFF to the watchlist and monitor positions in CGC, CRON. and TLRY. Beverage companies, NBEV and tobacco converts PYX are also on our radar.
ACBFF earnings are scheduled for 11/8/18 after hours.
Trade more cautious. Take fewer positions and reduce position size. This is our mantra for the week until we see evidence institutions are interested. Breadth must improve very soon as well, so watch NYMO and NAMO.
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