Hello new friends!
Just wanted to give a trial run of this Substack, never used it before. The tone of this will tend to be sarcastic and dry humor like my usual writings, plus it’s a quick one-off before going back to studying.
So, a few things I’m watching about the market momentum this week:
1) The overall state - We all know we’re in a bubble. It does not make you cool or smart to reiterate we’re in a bubble. The same thing happened in 1998 and half the world saw asset prices overvalued years in advance… and promptly missed on a ton of gains in the market (but were paid back in their ability to be smug for years after, I imagine). That said, my handy dandy metric the Net Options Pricing Effect (NOPE) has been warning me since last Friday that we’re in a period of weakness, so I’m being careful especially in assets highly correlated to the indices. Right now I don’t see any other obvious “oh shit” metrics (except for SqueezeMetrics’ DIX and a drop of volume, but who knows, maybe some long/shorts just blew up over Gamestop or took a sabbatical), but a good hedge pays for itself in time. I’m keeping slightly short on SPX in general, although the vol crew tells me we should be long gamma/volatility muted until closer to the monthly OPEX.
2) Marijuana - Marijuana is hot, and part of the broader “Blue Wave”/ESG narrative that’s been pulsing through the market for the past year or so. It tends to correlate strongly to other ESG/”Blue” sectors, especially solar at the moment. Stocks I’m in currently in this sector include:
$MCMJ - This is a sleeper SPAC, pre-letter-of-intent that is focused in the marijuana space. It’s been sleeping partially because it’s fairly unknown by most, coupled with the pre-LOI state. If the marijuana boom continues I expect to see a ton of traction here since it hits the SPAC salience meme as well, and it’s hovering around $10.70 at the moment (so your downside, if you buy the shares and not warrants) is around 7% maximum. Author note: I do have positions in shares and warrants in $MCMJ.
$SNDL - This is pure garbage. I mean, most marijuana companies are bad, but this is a complete meme pure play given it was trading under a dollar for most of its life. This is fantastic for momentum plays and likely will be hot tomorrow, so if you wake up early acquiring a few and praying isn’t a bad call. Author note: I purchased 100 shares in the after hours in SNDL at $1.80
$MMEDF - This is an OTC stock, and probably less decidedly garbage than other stocks listed here. It has rumors of uplisting to the NASDAQ, and presumably has a few products in the works. It’s a psychedelic play so it is not directly in the marijuana space, but is adjacent to it! I expect it to boom in the coming days again, just as we observed in November when Biden was elected and we all remembered that weed was a thing. Author note: I have 300 shares here.
$TRUFF - This is a psychedelic garbage play, but it looks promising and the name is memorable which I like. It’s literally a truffle producer in the Netherlands, but it will be lifted along with the rising waters just the same. It’s an even cheaper psychedelic play than $MMEDF if $3 is too much for you to bear. Author note: I have 1000 shares here.
$RWBYF/$CURLF/$CLVR - These came primarily from pot stock recommendations on Twitter plus this article on highly shorted stocks - https://www.thecannabisinvestor.ca/4-cannabis-stocks-that-could-benefit-from-the-short-squeeze-revolution/
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I expect the first two to move slower similar to TRUFF/MMEDF given they do not have options and that tasty, tasty gamma. The latter seems like a great new play in the space, but I don’t have much DD otherwise except the semantic network effect. As long as Tilray keeps running, I expect all the pot stocks, no matter how stupid, to run with it. Author note: I have positions in none of the three stocks, but may open positions tomorrow or in the future.
3) Solar - Solar is sizzling. I’m going to keep this section brief, simply because this is already too long for an email. Some plays I’m either in or looking at in the space:
$TAN/$ICLN - Author note: I have a position in ICLN (1 call option), but these are fairly safe bets for a play on the solar meme. These won’t run as hot as the single stock names, but in the era of dispersion trading you might see some ridiculous movement if one of the holdings becomes extremely ridiculously hot. I’d rank $ICLN as stabler for long term than $TAN, simply because when it comes to stupid meme stocks which will eventually explode, I can’t think of a better name than $PLUG (the top holding at this time for $TAN).
$MAXN - This has been a personal favorite of mine and a sleeper hit for a while. MAXN is a fairly recent IPO (August 2020) based in Singapore, so it has the benefit of betting from the US Policy Shift/Blue Wave without the risk of actually being based in the US. It’s been a steady mover, and recently tore upwards over 25% over the past week. Author note: I have a long call position in this stock (a LEAP position).
That said, I want to clarify that none of the above is in any way investment advice. Most of these stocks are honestly terrible to hold long term, but benefit from the hype surrounding the current meme trend we’re in.
Cheers, and have a good night!