Happy Veterans Day!

Welcome back to the Rude Awakening for Wednesday, November 11, 2020.

Good Start to the Day

Markets are moving to the upside, once again pressing up on those all time highs.

We’re trying to see if we can get two or three candles up above where we are now. This could give us some incentive for more buying power in the marketplace, possibly pushing us even higher than before.

There are some juxtaposing issues taking place right now.

Number one is a negative factor: the coronavirus. We’re now at all time highs in the daily infection rate. Deaths are still lower than what they had been in the past, but the hospitals are strained for capacity.

This is going to weigh on the economy. We are getting up to that point where we’ll likely have to close businesses down again, which means higher unemployment, which would definitely hit the marketplace.

Number two is a positive factor: earnings season. More companies are reporting stronger earnings than street expectations. But, the virus problem is pushing up against this, making for greater volatility in an already highly active market.

With that being said, we have some stocks we’re still watching for bearish plays…

3 Downside Opportunity Stocks

The entire cannabis sector is looking at a downturn right now. Tilray, Inc. (TLRY) reported earnings earlier this week. The net loss of two cents per share was ahead of consensus estimates calling for a loss of 21 cents a share. But sales of $51.4 million were lower than expected estimates at $54.43 million.

Now TLRY is in a definite downturn. This is a stock to watch for downside potential.

We’re also looking at Aurora Cannabis Inc. (ACB), another pot stock. ACB had a nice pop monday, but is falling again.

As Barron’s reported earlier this morning: “Aurora Cannabis stock seems set for another double-digit drop on Wednesday after the company announced a proposed overnight offering of $125 million of shares.”

They’re trying to raise cash by doing this, but it’s hurting their stock price.

ACB is another opportunity for a bearish play in the near term.

Lastly, we’re looking at Revlon, Inc. (REV), which was halted in trading earlier this morning. This is a tough stock to trade, as it normally has a very thin float.

Float refers to the regular shares a company has issued to the public that are available for investors to trade. A company's float is an important number for investors because it indicates how many shares are actually available to be bought and sold by the general investing public.

REV has a thin float, which means there are fewer shares available.

But REV has had a very big pop today, opening at $8.32 and jumping all the way up to $14.56. It’s now come down to about $10.79.

This is another bearish opportunity, as we look at it to possibly retrace to the downside.

These are the ones we’re watching today.

We'll be back with you tomorrow for some new insights from the trading desk.

Regards,

Scott Stewart
Editor, Rude Awakening