Risk On

Stocks were mixed last week with the DJIA, S&P 500, and NASDAQ closing lower but the Russell 2000 continued to show relative strength and finished up 1.46%. 

This week the industry that exploded higher and attracted the fast money was cannabis. ETFs MJ and HMMJ.TO traded higher by more than 17%.

Something else exploding higher is investor's appetite for risk. Just look at the gains made in the CSE Composite (cannabis, blockchain/crypto), IWC-Micro-cap stocksRUT-Russell 2000, and the TSX Venture (mining/exploration, energy) the last three months.

And then, there's penny stocks. I rarely touch stocks under $5/share but last fall I made an exception. I started to notice a significant increase in volume and some positive price action in some of the lower-priced stocks I track.

I'm no longer alone. The interest in penny stocks is on fire...

Check out these headlines:

Newbies Discover Penny Stocks and 1 Trillion Shares Get Traded - Bloomberg
A Handful of Penny Stocks Just Made Up a Fifth of US Volume - Financial Post
Penny-Stock Peddlers Piling Into Reddit Forum Prompt Rule Change - Bloomberg

Clearly, investors are feeling confident. Newbies and those who have never experienced multiple market cycles may even be feeling over confident. This doesn't mean things can't continue. It's just a reminder that when you begin to see mass participation in high beta stocks, the bull market is no longer in the early innings. 

So, if you find yourself with more than just a couple high flying penny stocks in your portfolio, it might be time to start paying closer attention. As fast as many of these stocks can go up, they can go down even quicker. 

What I'll be Watching This Week 👀 - Ethereum

Can Ethereum do what Bitcoin did? Breakout to new all-time highs and then double in price in less than a month?

When it comes to cryptocurrencies you need to have an open mind, especially when it comes to price expectations. Anything is possible.

Price targets don't seem to mean anything and both upside and downside surprises should be expected.

Right now Ethereum is threatening to break out. Or break down. Place your bets...

In case you missed last week's update you can read it here - Trends to Watch in 2021.

2020 is officially in the books. You can check out our closed trades and performance here.

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