Marijuana stocks exploded higher this morning as investors speculated that the solid Democratic federal government resulting from yesterday’s Georgia election would be favorable to this fast-growing industry. The average stock in our portfolio is up 7.7% today as I write, with six of our eleven stocks having hit new highs today.
Thus, our fully invested position continues to pay off.
But what comes next?
I’ve been saying for months that there’s a big correction somewhere ahead, and I’ll continue to say it until it comes. Someday this sector needs to remind investors what losing feels like.
There’s a chance that that correction will start tomorrow. The three previous tops in this sector have all come after major legal milestones—specifically the beginnings of legal marijuana commerce in Colorado, California and Canada. However, today’s news is not quite in the same category. More important, as long as the charts are strong, I’m staying heavily invested. As the Jesse Livermore quote over our office fireplace mantel says, “Markets are never wrong; opinions are.”
As for our individual stocks, there’s only one significant news piece.
Jushi Holdings (JUSHF) Monday announced an offering of subordinate shares intended to raise $35 million—and at the same time increased guidance for the fourth quarter of 2020. The stock sold off in reaction, but remains in a strong uptrend, and if you haven’t bought yet, you could buy here, remembering that this is a smaller, lower-priced stock.
Other stocks with attractive charts are CRLBF, CURLF, GTBIF, TCNNF—basically the four leading marijuana sellers in the U.S.—all of which have broken out to new highs today. However, if you do choose to buy on this breakout, take care to cut losses short should the stocks turn down from here.