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Can Sin Stocks Survive a Legal Weed Boom?

The government shutdown presses on and stocks continue to climb higher this week.

Coincidence? We’ll find out soon enough as the political bickering intensifies.

According to multiple reports, Trump “stormed out” of a meeting with congressional leaders Wednesday after democrats refused to budge on his demand for funds to construct the border wall.

Apparently, walking out of meetings is one of Trump’s signature negotiating tactics he’s used over the years.

“Trump once attended a protracted meeting to reach a divorce settlement with his first wife, Ivana Trump,” Bloomberg reports, citing a conversation with a former Trump lawyer. “After hours of talks, he disagreed with the amount of alimony she wanted, and the two sides couldn’t agree. So Trump stood up and left.”

Speaking of divorce, Jeff Bezos’ personal life is making headlines.

The Amazon CEO and his wife MacKenzie are splitting up after 25 years of marriage, he announced yesterday via Twitter.

Of course, the net-worth obsessed financial media’s first point of attack is questioning what will happen to Bezos’ massive fortune.

“Could the world’s richest man end up in the world’s most expensive divorce of all time?” Business Insider breathlessly asks.

I sincerely doubt Bezos gives a damn whether he has $137 billion or $68.5 billion in the bank — he shouldn’t have any trouble paying the bills. Let’s keep it real: No matter what happens with this divorce, at least a lawyer or two will enjoy a huge payday. The rest of us can pin our hopes and dreams on Amazon stock, which is now up more than 10% year-to-date.

AMZN

The past three weeks have been kind to Amazon shares as they battled off their December lows. But the real test lies ahead as the stock approaches resistance. It would be a shame if Bezos had to ditch some of his shares at these levels — especially if the stock continues to recover.

Following up on our legal weed commentary from yesterday, it appears the pot stock rally isn’t spilling over into other sin sectors

Shares of beer and wine distributor Constellation Brands (NYSE:STZ) fell flat Wednesday after the company lowered full-year guidance.

Wall Street’s reaction was swift and brutal. Eager sellers dropped the stock more than 12% to levels not seen since Feb. 2017.

STZ

It’s tough trying to survive in the booze business these days — especially when it comes to beer.

“Cowen & Co. analysts, in a recent research note, said that 2018 looks to have been the ‘worst year for beer sales’ in the nearly decade-long period it has covered the alcohol industry,” Investors Business Daily notes.

Even Constellation’s $4 billion stake in Canopy Growth Corp. (NYSE:CGC) can’t redeem this stock right now. But that’s not stopping other beer companies from trying to make headways into the growing marijuana business.

As beer sales drop, Molson Coors Brewing Co. (NYSE:TAP) CEO Mark Hunter said late last year that the cannabis market could add up to $7 billion to $10 billion — and that’s just in Canada.

Hunter’s backed up his bullish predictions by hitching his weed biz prospects to Canadian marijuana cultivator HEXO to help develop cannabis-infused beverages. So far, the deal hasn’t helped TAP shares get back on track. Even after an impressive fourth-quarter rally following a big earnings beat, TAP is more than 35% below its all-time highs posted over two years ago.

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Turning to the major averages, it looks like the Dow’s four-day winning streak is in jeopardy today.

Futures are pointing to a lower open across the board this morning, supposedly due to fears of an economic slowdown in China (again?) and the border wall fiasco.

We’re better off forgetting about these headlines and focusing on price. The major averages have just snapped back from deeply oversold conditions —and we’re just now approaching resistance levels. We’ll need to see how the market will react to a little adversity now that the initial bounce is cooling off.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Rude Awakening PRO, The Seven Figure Formula and Seven Figure Signals. Over the past decade, Greg has helped build the small-cap and technical research teams. His analysis has appeared in Forbes, Yahoo Finance, Bankrate, and countless other publications. Greg is a member of the CMT Association...

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