Monday, November 7, 2016

UK in trending news. Cannabis: the other election

Hillary's influence on Wall Street.

When it seemed that there would be a tenth consecutive day of falls in the SP500 index, something that has not happened since 1975, the weekend the FBI canceled its trial against Hillary Clinton, arguing there was not enough evidence to initiate proceedings against her. Also, again all the polls are giving Hillary a win, what Wall Street wants. End point: immediate reaction of the futures and global stock markets, today in strong rises, with the SPX reaching almost 2% in these instants and with all sectors in green. Definitely, the market fears Trump, and tomorrow's result will set the trend for Wall Street and other stock markets until the end of the year.

Today's Heat Map on Wall Street: the highest daily rise since June.

The other elections: Cannabis

Regardless of the Clinton-Trump duel that will have everyone in front of the television set at 7pm EST, there will be other less important choices, but for the trader, attentive to investment opportunities can be very significant. The legalization of marijuana is already on track in the US, and will be in the ballotage of nine states today, including California, which represent 25% of the North American population. There are several legal companies, most penny stocks, grouped under the MJIC North American Marijuana Index and traded on the Over the Counter Bulletin Board (OTCBB), in an industry that completed an impressive growth of 17% in 2015. And the surveys They indicate that 57% of adults are in favor of the legalization of cannabis as a medicinal and recreational drug. A similar trend is taking place in Canada and countries in Europe.

Although I am not a supporter of the legalization of marijuana, here I act more as a trader: it is too interesting a niche to put aside. The success will be in choosing the companies that will prevail over the rest. Without being a guru on the subject, I opt for the moment for the largest Market Cap, the highest volume of transactions and the characteristics of your business. I suggest three, after reviewing their fundamentals:

- Terra Tech Corp TRTC, Market Cap $ 175M, yesterday with 22 million transactions, is perhaps one of the most popular stock, this year with an increase of 336% (!), Focused more on the agricultural aspect of the plant: crops and production.

- Growblox Sciences Inc GBLX, penny stock of only $ 35M of capitalization but with a high volume of transactions, which allows trades with little spread. Very focused on cannabis chemistry research, which turns it into medicines and therapies. I see potential.

- American Cannabis Inc AMMJ, dedicated to design and consultancy, is associated with Canadian companies, which makes it a binational business. Its capitalization is $ 85M and it has a good volume of transactions in the stock market.

- Canopy Growth Corp TWMJF, largest producer and Market Cap of Canada, with exponential growth in sales.

There are other interesting companies: Medicine Man MDCL, focused on cannabis consultancies from growth techniques to retail operations or Cannabis Sativa Inc CBDS whose stock grew almost 2,000% YTD (!). According to the results of the ballotage of today it will be seen if it is convenient to do trading (not investing) in th risky industry, like all penny stock companies. A Hillary victory would pop up this sector.

GBLX has the potential to grow. His ichimoku shows a clear bull strategy, 
by today surpassing the blue conversion line to the red base line on the cloud.

UK in trending news: Brexit, May, Bank of England

Two important news from the United Kingdom: The pound, followed by etf FXB, so affected months ago, with minimums of 31 years, resumed its vigor once again upon hearing the news that the Superior Court of that country ruled that the approval of the parliament to activate Article 50 that puts the Brexit plan into immediate operation, although it leaves the option of appeal to the government. Tremendous blow for Theresa May and her cabinet that planned to give immediate start to her 'Hard Brexit', the complete divorce of the European Union. As a result of this, the GBP/USD pair exploded upwards, almost +1.2% at the moment. Take note that this strengthening could be brief if in December it resolves the appeal that the government will raise.

Everything that happens in the United Kingdom is setting the pace in the Eurozone, curiously since they left it via Brexit. The second important news was given by the Bank of England, which decided, like the FED yesterday, to maintain the reference rate unchanged at 0.25% and continue its debt issuance program, via government and corporate bonds. Its economy seems to be effectively improving when the QE rescue programs work: this week your PMI of Manufactures reached a surprising 55.4, while your GDP increased to a healthy 2.3% YoY (year over year, compared to the same period of the previous year). It still needs to level its trade balance as imports continue to outperform exports, despite the weak pound.

The gap between exports and imports is widening. 
Work for the British to tighten them as a sign of improving their economy.

The divergence between Pound and FTSE100 index

Already in a previous post, we show the divergence between the stock index FTSE100 and the pound, both at historical highs and lows respectively, and its reason: most of the companies that make up the FTSE100 index generate sales abroad, which bring more money by converting to your weak local currency. The breakdown that occurred in mid-June, the day of the Brexit election, can be seen in the comparative chart. Only if the FTSE100 continues to rise and the pound stops falling, could be interpreted as a technical signal that is beginning the strengthening of this currency, along with an increase in exports.

The EWU, etf that covers companies in the United Kingdom, is falling after the pound.