Part of the Stock Digest group of websites: Visit Small Cap Stock Digest  

This Pot Stock Mania Isn't Even Close to Dying Out: Taking Stock

Stocks are looking lower to start the day, potentially to the point of erasing most of the Nafta-related gains from Monday’s session.

Italy is the culprit for the early weakness, with Europe’s Stoxx banks index slipping as much as 2.2 percent at one point (though now well off lows) with selling spilling over from Italian banks to the rest of the complex. The country’s bonds fell to their weakest level in over four years after the head of the European Commission warned of a Greek-style crisis.

More often than not though, stocks in the U.S. tend to dip early on these types of jitters only to quickly rebound into or after the open. PepsiCo could be one distraction that helps, as shares are now in positive territory after results -- the initial reaction to the reduced earnings forecast was negative, but there’s FX impact to be aware of and the boosted organic growth view is probably what the Street will be more focused on.

More Alarm Bells

The "Something Alarming" section in Friday’s column talked about the potential for negative preannouncements in the near term given the recent barrage of troubling reactions to earnings and qualitative commentary. Since then, beleaguered industrial bellwether GE said it would fall short of its yearly earnings forecast, Irish airliner Ryanair cut its profit outlook, London’s Royal Mail plunged to a record low after a surprise warning, Swiss HVAC name Ferguson dropped on weak numbers, egg distributor Cal-Maine reported a monster miss, and high-flying hedge fund hotel Stitch Fix cratered more than 20% after results.

Stocks are looking lower to start the day, potentially to the point of erasing most of the Nafta-related gains from Monday’s session.

Italy is the culprit for the early weakness, with Europe’s Stoxx banks index slipping as much as 2.2 percent at one point (though now well off lows) with selling spilling over from Italian banks to the rest of the complex. The country’s bonds fell to their weakest level in over four years after the head of the European Commission warned of a Greek-style crisis.

More often than not though, stocks in the U.S. tend to dip early on these types of jitters only to quickly rebound into or after the open. PepsiCo could be one distraction that helps, as shares are now in positive territory after results -- the initial reaction to the reduced earnings forecast was negative, but there’s FX impact to be aware of and the boosted organic growth view is probably what the Street will be more focused on.

More Alarm Bells

The "Something Alarming" section in Friday’s column talked about the potential for negative preannouncements in the near term given the recent barrage of troubling reactions to earnings and qualitative commentary. Since then, beleaguered industrial bellwether GE said it would fall short of its yearly earnings forecast, Irish airliner Ryanair cut its profit outlook, London’s Royal Mail plunged to a record low after a surprise warning, Swiss HVAC name Ferguson dropped on weak numbers, egg distributor Cal-Maine reported a monster miss, and high-flying hedge fund hotel Stitch Fix cratered more than 20% after results.

Sectors to watch today include the pot stocks, as wild rallies on Monday continued after the close (see more on this in the next section), automakers with monthly auto sales coming out (and following a Nafta bump in Monday’s session), the truck machinery names like Cummins and Navistar with preliminary orders expected sometime today (recall last month was another monthly record), and the airlines with a possible update at JetBlue’s investor day (space has seen awful action since the beginning of last week).

Pot Stock Mania, Part Two

A lot of people wrote off the pot stocks the second Tilray set off volatility halt after volatility halt in a downward spiral that occurred on Wednesday, September 19, just seconds after the stock top-ticked at $300.

They said this was exactly how the crypto craze of late last year died out, like when Longfin had a similar super spike to $142.82 only to quickly reverse and spend the rest of the year slow crawling to sub-$3. Same thing with Riot Blockchain, the biotech firm formerly known as Bioptix that surged on a name change only to bust later on. And then, of course, we had the sad tale of Long Island Iced Tea, the beverage company whose shares shot up after becoming Long Blockchain only to fizzle out to its current state as a penny stock. If only they waited a year to become Long CBD-Infused Tea!

Click here to continue reading...

Subscribe to the SCSD email list and get the latest small cap stock activity directly to your inbox, for free.

MARKET SUMMARY

INDICES

Name Last Change
DOW 23675.60 0.35%
S&P 500 2546.16 0.01%
NASDAQ 6783.91 0.44%
TSX 14416.89 0.38%
TSX-V 543.19 0.00%
RTY 1377.18 0.07%

Technology

Name Last Change
APPL 166.07 1.28%
GOOG 1028.71 1.18%

@SmallCapDigest ON TWITTER

Part of the Stock Digest family of websites
Resource Stock Digest