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This week’s update is both early and much shorter than normal.

It’s been a tough few months for cannabis investors, but no downtrend lasts forever, and yesterday’s blast-off by Aphria (APHA), which sparked buying across the sector, is a sign that the worst has almost certainly passed.

As we’ve seen in recent days, the major indexes are a bit soft this morning, with the Dow down 73 points and the Nasdaq down 15 points.

There are a couple quick things to cover today. First, the introduction in the email that went out introducing yesterday’s Issue was placeholder text from a past update. I apologize for the error and hope it didn’t seem too random. Second, I’ve received questions about the stocks in the Special Reports that you have access to as subscribers to Cabot Early Opportunities.

Yesterday was the worst day of the year for cannabis stocks, with HEXO (no longer in our portfolio) leading the way down with a plunge of 22.5% after the company announced that revenue for the fiscal fourth quarter, ended July, would be $14.5 to $16.5 million, well short of analysts’ expectations of $24.8 million.

The market’s had another rotational week—the big-cap indexes have done OK (S&P 500 and Nasdaq up around 1%), small-cap indexes have done even better (up nearly 2%), but growth stocks have suffered another round of heavy selling, with many falling to new correction lows.

The market has been changing faster than the weather here in the northeast. And like any big change it’s been a bit tough to navigate.

For the first time in a while we’ve had a relatively calm week. On average, our portfolio is unchanged from last Thursday’s close.

The market is once again flirting with all time highs. The good week was driven largely by the announcement of a partial trade deal with China. But the main event will be earnings going forward.

Stocks rallied early in the day but then skidded after that, closing not that far from where they started. The environment remains mixed, with the market looking fine but growth stocks a bit sluggish.

While we’re growing more optimistic that the next big move will be up, we continue to advise a cautious stance as the market’s numerous crosscurrents continue—the indexes are still range bound, there’s rotation under the surface and relatively few stocks are hitting new highs.

The rotation that we started to pick up on a couple of weeks ago was unleashed late last Friday and the first couple of days of this week, with just about any stock and sector that’s enjoyed a good run this year coming under pressure—including more than a few names that flashed abnormal intermediate-term action.

The overall market appears to be largely pricing in a continued trade war with China and a slowing global economy. It’s also pricing in a rate cut this month and more to follow. The indexes appear to want to forge higher provided trade frictions don’t get worse, the global economy doesn’t crash and the Fed comes through on the rate cuts.

I’m going to go off on a little tangent this week to share something with you that I think will help put this market, and the action in our stocks, into context.

Following last week’s vicious rotation, this week has been refreshingly quiet. As of Friday morning, both the S&P 500 and Nasdaq are nearly unchanged on the week (up a smidge). Considering we’ve had some worrisome headlines (especially the Saudi oil attacks), we take this calm action as a good thing.

The cannabis sector has been trending down since the end of March, giving back its spectacular gains from the start of the year, and until now I’ve remained optimistic about our stocks, partially because of their outstanding fundamental growth metrics but also because Cabot’s two main trend-following indicators for the market were positive.

As the futures indicated, the market is down sharply this morning, though the major indexes have bounced from their lows. As of 10:45 am, the Dow is sinking 454 points while the Nasdaq is down 118 points.

The market looks set to open down relatively sharply this morning, with the futures indicating opening losses in the 0.7% to 1% range for the major indexes. However, our focus is really on the overall evidence, which is clearly worsening.

Continue to step lightly. The overall market is still positive, but it’s clear that the buyers aren’t in firm control—the environment is news driven and rotational, with few stocks hitting new highs.

The S&P 600 Small Cap Index, which hadn’t broken above 1,000 for most of 2019, is now comfortably above that level and appears to be heading higher.