How to Beat the Trade War for Profit
It’s been a wild few days in the markets.
After the S&P 500 hit new highs a few weeks ago, the bears are back in the driver’s seat this week as stocks swirl the drain.
Through Monday afternoon the Dow sank as much as 904 points (blue line), the S&P 500 fell 3% (green) and the Nasdaq Composite (black) is down almost 3.5%. Even small-caps are taking a big hit with the Russell 2000 (red line) crashing 3% on the day too.
This all on top of Friday’s losses too.
You know what stocks folks trade and own that aren’t affected by the trade war?
Think about it… It’s virtually impossible for the trade war to affect these companies because unlike large multinationals, they are often limited to small jurisdictions like states and provinces.
To be fair, pot stocks aren’t completely immune to market forces. The sector-wide rally has backtracked along with the major averages this month. But if we take a wider view, it’s clear that the longer-term trend is pointing higher.
When market moves don’t make logical sense, it typically means that an opportunity is afoot. And we’re seeing that opportunity take shape right now.
Let’s Go to the Charts!
First, it makes sense to take a look at our proprietary Penny Pot Index.
At a glance, you can see the 2019 correction that most cannabis investors are fixated on… and the much more powerful long-term uptrend that’s been propelling the Penny Pot Index higher for more than three years now without fail.
In June, our Penny Pot Index touched its uptrend line for the first time since the fall of 2017, and it’s been quietly moving higher since then.
The correction in cannabis stocks this year has been frustrating. But in the context of the longer-term trend, it’s a blip on the radar.
And all signs point to the correction coming to an end this summer.
You might be wondering what’s driving the overall pot market higher in the longer term…
That brings us to our second chart, which comes from The Green Fund:
Legal cannabis spending has been carrying out a parabolic surge higher since 2016 — and several independent sources estimate that it’ll eclipse $40 billion by 2024. That’s an astounding amount of money pouring into a very concentrated collection of small companies.
In these regular alerts, I’ve filled you in on many of the political updates that are clearing the way to more legal access to cannabis. It’s an unstoppable trend.
And it’s inevitable that the price action catches up with the cold, hard cash that these companies are bringing in.
Then why the correction?
I’ve never shied away from saying that there will be winners and there will be losers in the cannabis business.
There’s a world of difference between the innovators in the legal cannabis market and the also-rans trying to ride the hype of publicly traded pot.
Still, it’s not always easy to tell the two apart.
The fact that cannabis stocks are trading lower across the board this year is an indication that investors aren’t comfortable deciding which stocks belong in which groups — they’d rather just discount everything.
Now with cannabis stocks turning higher this summer, I think our patience is set to pay off in the second half of 2019.
It’s an incredibly exciting time to be a cannabis investor!
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Chief Technology Expert, Technology Profits Daily