There has been an increase in bearish market calls lately and the S&P 500 was down four days in a row before today, but I suspect that a lot of the traders that are rooting for weakness just want a better technical setup for a Santa Claus rally. The phenomenon of strength to end the year is well-known, but it doesn't hurt if a strong market takes a rest for a week or so before the holiday spirit takes hold.
Traders have been a big grumpy lately, as there has been rotation caused by IPOs and secondaries to navigate. Also, the very hot SPAC group has cooled off and the hot money has been looking elsewhere for some short-term action.
One group that is showing a little life today is the cannabis group. The stocks have become extended, but they have been consolidating for a couple of weeks now and are showing some signs of turning up. A good way to measure the group is with AdvisorShares Pure US Cannabis ETF (MSOS) , which owns 'multi-state operators' in the U.S.
The largest holdings in this ETF are Green Thumb Industries (GTBIF) , Curaleaf (CURLF) , and Cresco Labs (CRLBF) . All three of these charts look good, although they are a little extended. Valuations are not terrible since revenue growth has accelerated lately. CURLF had revenue growth of 323% in the third quarter and saw revenues nearly double. After some consolidation, I expect these names to keep moving higher.
The S&P 500 is hitting an intraday high as a write. A strong close today will give a boost to sentiment and help create some 'fear of missing out' as we head into positive seasonality. While the market has been mixed recently, it helps to create a good technical setup.