dani-shay dani face dani quote

Pot stocks are smoking?

What goes up?

With the market at the highs, like we talked about in the newsletter recently, my primary consideration has been short squeezes. This is because these tickers provide quick opportunity, oftentimes overnight, and typically on a large scale.

Last week, we talked about tickers like BYND and AMD. 

This week, we’ve had several other opportunities, particularly in the weed stocks. 

Here’s why you should consider looking at them…

Now, hate them or love them — marijuana companies are in a hot, growing industry group, and with moves towards either decriminalization or legalization across the country, this is a group that continues to grow. 

Of course, due to the fact that these are companies making money off of selling a once illegal product (that’s still illegal in many places) it’s going to be a polarizing issue.

I hate to compare it to Beyond Meat, and their meatless patties. However, in a way it’s similar. Due to the much criticized, debated, and love vs. hate relationship people have with this product, it’s mirrored in the stock chart.

You have to remember that stock charts are literally emotions written on a screen, in terms of price. These emotions create patterns.

Because of the divisive nature of companies like Beyond Meat (BYND) and the weed companies – like Canopy Growth Corporation (CGC) and Tilray (TLRY), they’re going to be incredibly volatile.

Remember when cryptocurrency took off? This is similar as well. 

While these issues can be debated, I’m much more concerned about trading them.

Plus, how that overall emotion impacts my trades — and potential profits and losses. Because these companies elicit such strong opinions from consumers and traders alike, the tickers will move on a day to day basis upwards of 5-10% and sometimes even 15%. These moves are extraordinary in the stock market, as companies like Microsoft (one of the strongest out there) will typically move at the max around 2-2.5% on a great day. Now there are outlier days where I’ve seen it move as much as 3-4% — but this is unusual.

Also because they’re so highly debated, they have a ton of traders shorting them — and betting on their failure.

It’s this emotion that causes tickers to gain over 60% in a week, like BYND:

It’s also what allows me to get gains like this:

So — we can all make jokes about ‘how the pot stocks are smoking’ and debate the legalization — but we’re traders, and what I care about and what I look for, are high probability moments in time.

And, a highly publicized, debated ticker like CGC provides the exact opportunity for us, as traders. High short interest, highly covered in the news, and tons of volume.

This is what a short squeeze is all about.

Leave a Comment

Up Next...

Handling emotional trading days

On Friday, we talked about what happens when the market wanes. During the last newsletter, I talked about the technical parameters for trading this type of move.  But, what about the emotional side, and the actual logistics of trading a day like this? Well, currently I’m in Hawaii and woke up at the crack of … Read more

Read More

When momentum wanes…

As I’m sure you’ve noticed, the market’s experiencing one of the first significant pullbacks we’ve seen in awhile. I have my eye on tech and high momentum stocks, particularly market leaders: Microsoft, Apple, Google, and Tesla.  Right now, these leaders are telling us this market is going down — and fast. There were far too … Read more

Read More

Is SPCE the new TSLA?

On Friday, we discussed the macro/technical take in SPCE — which is shaping up to be the move of dreams. Is it the next TSLA? Maybe… Richard Branson has quite a ways to go, as Virgin Galactic is a fresh IPO, but it’s definitely giving us moves like TSLA.  Here’s my analysis that has helped … Read more

Read More

Subscribe Today!

Want to walk the path to trading success together? Join Danielle’s “Five Star Trader” E-Letter for market insights, tips, tricks, and special bonuses.

Sign Up Now

Free Downloads

Squeeze Checklist

When you find a squeeze, check these boxes to see if you’re looking at a higher probability bet.

Risk Checklist

Before we can make money we must define the rules that define our risk parameters.

High Probability Plays in a Directional Market

Download Danielle's free eBook

10 Steps to Becoming a Successful Trader

Commit to becoming a successful Trader

Strategy Selection Risk Gauge

Danielle focuses on creating a constant stream of income through the selection of trend-following, directional plays.

Upcoming Appearances

Check Back for Upcoming Appearances