It is a sleepy Monday morning in August, but breadth is solid as it approaches 3 to 1 positive, and small-caps are leading with a gain of 1% for the Russell 2000.
New 12-month highs are under 400 and will stay suppressed as money rotates into beaten-down small-caps and out of extended big caps. FATMAAN names are seeing minor gains, oil is weaker, financials are up, and there is some stock-picking action to be found.
My stock of the week is cannabis name Cresco Labs (CRLBF) , which will have earnings on Aug. 13. I believe that the sector will start to find some support after a "sell the news" reaction to legislation in Congress. The MSO (multi-state operator) names are seeing big revenue growth, and SAFE Banking will happen sooner or later.
Another cannabis name I'm watching is urban-gro (UGRO) , which provides the infrastructure for cannabis growers. It just completed an accretive acquisition with a design firm and should see solid revenue growth when it reports on Aug. 11.
This is still a tricky trading market with many small-caps languishing due to a lack of interest, which has been caused by a lack of relative strength. The bottom-fish plays are not coming back easily, and the number of stocks up more than 10% is still running very light. There are opportunities, but stay selective and manage them tightly.
