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June 14, 2017

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Cannabis Stocks - A Fast Growing Industry

Last Week's Closing Indices

52-week Index highs

52 Week Highs 

The DOW 30 seems to be stuck in a range

appears the markets seem to be caught in a fairly tight trading range for most of the year. On March 3 the DOW 30 closed at 21,005 and on June 6 it closed at 21,136. This works out to a 131 point gain in 3 months, or a gain of 0.006%.

The tight range is showing us that only a few stocks are responsible for the continued bull market, which is not a great sign for the months ahead. If only a few companies are causing the bull market than it will only take a few to go the other way.

Are investors looking for Apple to trade for $5000 a share, or maybe Amazon. It will never happen meaning someday investors will feel like they have made enough and start selling. A bit of a notice ahead of time. Once they start selling the markets will fall so fast we will be lucky to get out with our shirts still on.

There is a strong chance that the sideways action has to do with the hopes and let downs having to do with a tax reduction. The Republicans are just taking so long and the longer it takes the more blame people will put on the Republicans.

Investors that were also worried about the possibility of higher interest rates, since the Feds are holdovers of the Obama administration, had their worst worries come true. The FEDS raised interest rates by 1/4%.

This should not happen in my opinion. It could easily slow down the recovering mortgage industry. Wages have been stuck in the backwoods with no increases and millions of Americans are still out of work.

Although I feel the rally has more legs left, I am still concerned, as this is still the most overvalued market I have ever seen. Yes, the rally can continue but it's doing so on a small group of stocks and the best thing we can do is keep one eye open and take a defensive stance.

I don't believe this rate increase will lead to much, but it is a start to the road higher and corrections can start any time.

This means taking some profits on the big positions and moving that money into bargains in the secondary stocks, plus finding a low-priced stock and putting some money there.

Continued strong consumer confidence will be the recipe for a continued long term rally. Falling consumer confidence due to fear will be the straw that breaks the camel's back.
The DOW 30 chart below is an average of all 30 of the Dow Jones industrials and what percentage they're away from the 52-week high. I use it as a measure of when markets are undervalued, or overvalued, simply because these 30 stocks are carried by just about every fund there is. Keep in mind, since it is a discount, the percentage can never be in positive territory.

DOW 30 stocks discounted from the 52 week high

The record for the discount to the 52-week high is - 2.87% reached on 1.8.2010. The maximum discount was  -52.76 on 11.20.08 showing just how far this index can move.Currently the discount rate is -5.61%, meaning there is some room to continue improvement, but the nearer the average of all 30 stocks come to the 52-week high the more overvalued they become. In 2016 there were 24 that reached a new 52-week high. There have been 22 reaching a new high so far in 2017.

This index had been trading mostly between -7% and -5% from December all the way to today. We can see by the chart above how the Dow 30 has stayed in this range for six months, with only one breakout, making it harder to figure out what it is going to do next. 

Remember, once an index or stock sets a new high the next new high is easier to achieve. It only has to break the current one by 0.01%. Also, Once the previous 52-week high expires it is easier to set a new high. The DOW 30, about a week ago, set a new high 12 days straight for a total gain of 703.10 points in those 12 days but this works out to only a total of 3.9%.

The fear of losing profits will be the reason forcing the markets down rapidly, which in an overvalued market is, and should be, expected. Nothing goes up forever. Blue chips and big OTC stocks have become much overvalued again due to this continued rally.

Look for the bargains, look for the deals and look at newer and start up companies and do the homework.

The other best bet would be a small stock that reads good and offers a decent chance. It needs to be trading near the low-end but with a reason to climb. Again, they are out there. We just have to search hard to find them.

Good Luck!

JR Budke

A Fast Growing Industry

Loaded With Scams

  The Cannabis industry will be 2nd to none as far as growth.
Billions of dollars over a short period of time as the market is pre-built

Over the last several months I have been receiving promotional information on cannabis stocks in my email and even a few times as headlines to an article in MY Yahoo! Of course I was driven to do a bit of research and what I found what scary.

The email was about how we could invest $50 in 10 different cannabis stocks and we would be able to retire sooner than we ever expected.

Most of these companies were low-priced stocks (penny stocks), but a few were higher than a dollar. Nothing wrong with being under a buck but it does depend on what we are looking for.

A couple of examples would be a stock (CBIS) trading for $0.11 with no revenue and 2.31 billion shares outstanding. Another (MJNA) was trading at $0.14 with over $9 million in revenue but with 3.03 billion shares. (TAUG) $0.001 - 1.84B. (PHOT) .0063 - 1.9B. Not one is worth even following with so many shares.

There are a few of them that I feel are worth a closer look. If you want to watch them they are:  CVS Sciences (CVSI) $0.28 - General Cannabis Corp. (CANN) $1.21- Cannagrow Holdings (CGRW)  $1.02 . If interested in the industry these three show promise.

There are so many pot stocks with an outrageous amount of shares issued and trading. We need to remember my rule and that is to never invest in a penny stock that has over 100 million shares outstanding.

This is because with too many shares trading the Market Makers (MM) own the stock and the company can do little about it.

This is because MM's do not read the news on a company. They do not read the financial reports because they do not care.

They only care about "supply and demand" and with too many
shares trading there will always be a supply.

Most of these new pot stocks will never make it. Many are trading because they want to play the "private offering" game as they can continue to raise money without even getting up to go to work.

But, there are those that are real and very much concerned about building a strong company in the fastest growing business in North America. Rumor has it that the entire country of Canada will legalize cannabis next year. I'm guessing the US will be right behind Canada.

Yes, I do believe the cannabis industry is going to explode and as in any new industry there will be opportunities to make big profits on successful companies entering the cannabis market place. I also believe that the medical aspect will be the place to be.

Our best bet would be to find a low-priced stock that is pursuing the idea of making medical products from cannabis, as it appears cannabis has the ability to cure many problems. Companies that are developing unique health products and pharmaceuticals that utilize cannabis is the place we want to be.

I firmly believe we can make big money in this exploding industry but not if we are not very careful. We have to do our homework and make sure we do not get caught up in Pump & Dumps, or for that matter companies that have little to offer.

I am working hard trying to find a good candidate worthy of our hard earned money.
I am working on a few  good cannabis stocks and I will certainly let you know as soon as I find one I feel we should jump on.

In closing I will give you a cannabis stock I feel strongly about and it just set an all-time low. Its a Canadian stock trading at 0.10. The name is Algae Dynamics (ADYNF) and it looks like a great shot, especially when at the low (no bad news). The 52 week high is 0.84. Pick up some shares before it moves back up and I expect the move up soon.

We need to remember that, traders do not read the news, that too many shares trading is not good and the story has to make sense.


Powin Energy - (OTC-BB) (PWON) (52 week range 0.30 - 2.89 )now at $1.35.

NEWS -- 5.24.17 -- Powin Energy to Deliver 26 MWh Energy Storage System for San Diego Gas & Electric Clicking on the headlines will take you to the article.The link will open in a new page)

This is a giant contract when compared to the 2 MW contract with California Edison. It also shows Powin can build any size storage you need.

The problem is not very many shares are available anywhere under $2, making $1.35 a steal. Low float and no one wanting to sell are the reasons. My best guess is a much higher price in the next 18 months.

Buy Here!

From $1.75 to over $15.55
Advanced Micro Devices (AMD) (52 week range 4.30 - 15.55 )now at $11.77, up from $3.64 0n 1.20.17.

AMD has all of a sudden turned things around, as they always have, and many analyst are recommending buying the stock even after moving over 800% this year.

It appears Apple will be using AMD's new chip in the new 21" and 25" computers.

My problem now is if we should continue to buy and since I am very concerned about a big correction I recommend waiting to buy until we have a lower entry level as this stock tends to follow the markets down whenever they fall.

Take some profits and learn as much as possible and be ready when it trades lower. We could easily see over $20 in 2017, but under $6 in a correction.

From $9.50 to over $27

Fonar Corp. (
FONR ) (52 week range 15.70 - 28.09), now at $27.35. I first started following Fonar in 1982 and have followed it every day since. Great products would be the reason to own this stock. The current PE is only 9.26.

Fonar has been a favorite of mine for over 30 years. My buy at $.62 a few years back led to over $27 before falling back to the $9 area but once there the stock moved up and has been flirting with the $27 area again.

Fonar recently announced revenue of $20 million for the 3rd Q, with $5.5 mil. in profits, or $0.88 per share.

No matter how much I like the stock it has too high to buy. Entry is best if under $20. Lighten up while near $27.

Best if in after a pullback !

From $9.50 to over $19

Comtech Telecommunications ( CMTL ) (52 week range 9.52 - 19.80), now at $19.41, up from $15.00 last week. Our original buy under $4, in 2003, carried all the way to over $50 and split twice along the way. CMTL is a stock to own for the long term.

A few months back the company issued a press release, disclosing a public offering price of a new offering would be $14 per share,
which makes entry here a decent shot a profits.

Our buy under $10 last November has worked quite well, however in lieu of the overvalued markets taking some profits might not be a bad idea.

Best if in under $14 !

In closing I would like to mention that one of the worst things we can do is buy stock in a young penny stock company that has already issued, or is going to issue too many shares too low in price.

The market makers love too many shares as it keeps the price low making it possible to short millions of shares, which prevents the stock from moving.

Finding a quality small stock "to buy" with not too many shares owned, near the low, will be very hard but once found the rewards can be plentiful.

If you have a situation, or questions, please feel free to contact me.

I wish you all good luck in 2017!

Remember, if in the right stock at the right time
the market direction will mean little!

I'm J.R. Budke and this is my opinion!

Stocks in the Spotlight

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J.R. Budke became a stock broker in 1981, an options principle in 1982 and a branch office manager in 1987 and a National Sales Manager over 150 stockbrokers. He is currently inactive as a stockbroker as of 12/31/99. J.R. writes the articles and opinions for the Stocks in the Spotlight. The stories and stocks found on this site, or any "Stocks in the Spotlight" written material, are the opinions of J.R. Budke unless other wise stated, and should not be considered as advice. You should not purchase any stocks solely on the opinions found on the "Stocks in the Spotlight's" web site or in any of its written material. You should also be aware that options are not for everybody and carry a high degree of risk.

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The publishers of "Stocks in the Spotlight" are not investment advisors and are not acting in any way to influence the purchase or sale of the security. Before purchasing or selling any security profiled, it is encouraged and recommended that you consult a stockbroker or other registered financial advisor. The reader must understand that the companies we select may involve a high degree of investment risk. Potential investors must understand that they may lose all or a portion of their investment due to the risk involved.

The recommendations and updates in this "Current Up-Date" may include "forward- looking" statements as that term is defined in the Private Security Reform Act of 1995, & therefore are subject to various risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, and local & foreign factors will not differ materially from those suggested in the "forward-looking" statements as a result of various factors, including market conditions, competition, advances in technology, acquisitions, potential litigation, personnel changes, capital availability, and all sorts of other factors.