Slightly More Manic Monday
It is hard to say that the market was actually manic today, but we had a nice follow on from Friday’s bounce. Market breadth was quite strong, especially given weakness in bellwether blue chip, IBM. This morning, IBM stated it would not be able to reach its profit goals for 2015, which sent shares sharply lower for the day. Regardless, the S&P 500 managed a nice gain of 0.91% to close at 1904.
The cannabis markets may be establishing some footing after seven months of decline. We believe there might be some correlation to small and micro cap indices, as they seem to have found a relative bottom as well. Today MJIC Marijuana Index and Benzinga 420 Marijuana Index both appreciated by 2.66% and 2.3% respectively.
Daily Negative – There was an unfavorable article out last night by the New York Post titled, “SEC sniffing out pot companies for fraud.” Though most people know that the Post is a sensationalist publication, it has an influence and there were several companies referenced with a few seeing some tough selling pressures such as VAPE and DIGP.
As always, it is best to do your own due diligence and while media can shine a light on key issues, there are always more details worth understanding.
We discussed on Friday how a little positive risk sentiment would go a long way; today, it felt like investors were coming around. It is hard to make a valuation case for these companies, but prices have improved considerably. We have concerns with many of the companies in the space. However, we see incredible opportunities today and into the future for this early adopters’ market.