My comments on Tesla will be brief. Last week I asked if this was the end for Tesla; it’s not, yet, but the end is getting closer. Tesla closed the week at $262, so after ramping to $316 on word of a settlement with the SEC, it’s back down, because Elon Musk can’t stop sending out angry tweets. There is now a chance that the SEC will rescind their settlement and impose a greater penalty, in which case Tesla is done.
I currently have no position, because I don’t like riding roller coasters, but if it has another crazy ramp to the $300 level I will likely short again.
Of more interest is the Canadian pot stocks.
My favorite is TGOD.TO – The Green Organic Dutchman Holdings Ltd. They did their IPO in the spring at $3.50, and spiked all the way to $10 in September, before correcting back to $6 this week. There are two upcoming events to watch:
First, on October 17, marijuana becomes legal, sort of, in Canada. In Ontario the pot stores won’t be fully operational until April 2019, so I don’t expect a big initial spike in demand, but that’s a milestone to watch for. It could be a “buy on rumor, sell on news” deal, where everyone sells on October 17, now that the event has occurred. I suspect that once it is legal, institutional and private investors who didn’t buy it because it was illegal may change their minds and get into it.
Second, when TGOD did it’s IPO it’s initial investors were subject to a six month hold period, which expires on November 2. Some of those investors bought their shares as low as 50 cents, so they are now sitting on a sizeable gain, and it would be prudent for them to sell at least a portion of their holdings to lock in their gains.
So, I think between $5 and $6 TGOD is a buy, and it’s a sell at $10. That’s how I’m playing it. I have a sizeable position, so I don’t play to buy more. I will likely hold into December or January depending on price action.
I also like the following:
- Aurora ACB.TO
- Canopy WEED.TO
- Emblem EMC.V
- Organigram OGI.V
The plan with the above is the same; ride them past legalization, and when the RSI gets really high, start selling.
Is the top behind us? Perhaps, but I think there is a lot of room left to run, as mutual funds get into this game, so for now I’m riding the wave.
Thanks for reading, and happy Canadian Thanksgiving.
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The Big Crash (Sort Of)
by JDH on October 13, 2018
As you all know, on Wednesday the market “crashed”, or corrected, or went down. Further weakness on Thursday brought the broad averages all the way back to where they were in August.
mid-August.
Yup, we suffered through the “lost eight weeks”. Clearly a catastrophe.
I’m holding a lot of cash, so I wasn’t paying any particular attention to this crash, since it didn’t particularly impact me. Your results may vary.
So what does this mean going forward?
I suspect, not much. In fact, the pull back to the 200 day moving average, which is effectively what has happened, could be construed as a positive development. In other words, a buying opportunity.
My guess is that Trump and the Republicans will do very well in the mid-terms elections in November, picking up seats to increase their majority in Congress. If that happens, I assume the markets will react the same way they reacted the last time he won – by going up.
So I’m not ready to throw in the towel just yet.
The Canadian pot stocks also suffered in this correction, but with partial legalization happening on October 17, and with widespread sales up and running by the end of the spring, I believe that these stocks have more upside potential.
We shall see.
More next week.