Yet again, the markets started the day on a somewhat positive note, only to turn negative in a big, disappointing way partway through the day.
The impetus this time? There seem to be a couple of potential culprits. President Donald Trump addressed the U.N., and in the course of his address touched on trade, Iran and patriots, among other topics. This seems to have been the main negative driver, though there’s also the growing push for impeachment from the Democrats.
As stocks try to find today’s bottom, here are the stories that readers seemed most keen about.
Shopify Stock Is Feeling the Pain
Chris Tyler tells us that while buying on weakness can make investors a lot of money, the weakness may be far from over in Shopify (NYSE:SHOP) stock.
As he wrote, “After demonstrating early technical leadership, Shopify unexpectedly shifted gears. Now it has been correcting the past four weeks. In fact, SHOP stock is down over $100 in share price — for a decline of 28% — since hitting an all-time-high of $409.61 on Aug. 27.”
Tyler said the $300 level was a potential line of resistance, but not a very strong one. He remained “unconvinced that it will produce a meaningful bottom for Shopify bulls,” and after Shopify stock lurched almost 7% lower along with the rest of the market, $300 looks to have been flimsy indeed.
He thinks the more likely place it could slow is around $287, but “in a less forgiving environment there’s nothing to suggest SHOP stock can’t trade aggressively lower.”
And Tyler wasn’t the only one questioning SHOP stock’s fall. Vince Martin points out that investors may have just gotten more careful about the valuations of the stocks they’re buying.
He points out, “Roku (NASDAQ:ROKU) has dropped 39% in just a couple of weeks. The two most expensive tech stocks by price-to-revenue, Zoom Video Communications (NASDAQ:ZM) and CrowdStrike (NASDAQ:CRWD), have pulled back. SaaS names are down as well.”
Even as Shopify pulls back, he believes it still looks overvalued and, again like Tyler, sees the very real possibility of even more of a pullback.
Can Canopy Make Gains Thanks to … Vaping?
After being in the news for years as a growing alternative to the dangers of smoking tobacco cigarettes, vaping has been in the news more recently for far less palatable reasons — an illness that has led to the deaths of at least nine people in the U.S.
But Josh Enomoto sees an opportunity here for Canopy Growth (NYSE:CGC) — if the company can prove that its products are safe.
After all, the issue seems to be very localized.
“Interestingly, the BBC reported earlier this month that no known cases exist in the United Kingdom. Again, that’s very strange: Nearly three million British people are vape users.
And what about Japan? Philip Morris International (NYSE:PM) has aggressively marketed its iQOS system — which is functionally similar to a Juul e-cigarette — there. Yet we have not heard any case of vaping-related injuries originating from the Land of the Rising Sun.”
So if the issue quite possibly isn’t with vaping itself, then Canopy’s plans to launch a vaping line could be a net positive instead of the horrible mistake a lot of people think it is. And the fact that Canopy is based in Canada could very well help here. As Enomoto wrote, “By launching both a cannabis and vaping product into a regulated market, Canopy can prove that proper management is the societally and economically productive route.”
And if you agree that this illness may not be an inextricable part of vaping, Ian Bezek has a list of four companies you may want to consider while these horrifying headlines keep pressure on their stock prices.
The Future Looks Brighter for GE Stock
If you’re looking for some good news, you might be surprised to find it in General Electric (NYSE:GE) stock. Chris Lau thinks that GE stock could have more upside ahead.
As Lau wrote in his article, “According to Wall Street Journal, asset sales will bring in around $38 billion in cash, which in turn will assist GE in cutting its debt levels. The company already plans to buy back $5 billion worth of its debt to improve its balance sheet.” As GE stock slims down and simplifies its business, it’s going to be easier and easier for the company’s leadership to steer it right.
If you’re worried that the company is slimming down too much, or just don’t want to wait and hope, you can always put your money in one of General Electric’s spinoffs, like Baker Hughes (NYSE:BHGE). But if you have a longer timeframe, it may be worth just keeping an eye on the main GE shares.
That’s it for today’s commentary. Please feel free to drop us a note at editor@investorplace.com to let us know what we got right and what we got wrong. Happy investing!
