[Jun-Aug] Call Out: Cannabis Sector 🔥

Disclaimer: I own TLRY shares for long-term investment. I also used to work in the laboratory industry and firmly believe this sector is a multi-bagger in the long-term. I've been quite hesitant in making this call out. Because history shows, I will be very wrong. This sector always just seem to find a way to go lower. However, it was hit very hard by the broad market sell off and warrants attention for a quite possible recovery. Risk: Very High

This sector is highly speculative. It falls sharper than the broad market during a systematic downturn. It's been in a strong downtrend and is highly shorted. Story: Cannabis sales are up likely due to the mass stress caused by Covid-19. The industry remains strong and the demand for the product is arguably even larger. There is also a stronger incentive for the government to legalize and tax cannabis to recover from the pandemic financial damages. As the broad market continues to recover, this sector can benefit also. There is also a tail-wind from the potential "medical benefits" regarding the virus. Technicals:

MJ has been extremely oversold. It formed a bullish RSI divergence in 4h chart before going into consolidation. Lately it has created a higher high after forming a double bottom. It is currently overbought with a bearish divergence. It has caught a short-term bullish momentum, but wait for a pullback and a higher low to form possibly in the $11-$13 range before swinging. This will allow for a 1:2 risk-reward trade up to the next resistance level.

You may also choose to trade individual stocks that you prefer. As you can see, this is a sector-wide move and warrants attention.

It will be very volatile in the coming months. There shall be plenty of opportunity for day trades and swing trades. Good luck and have fun! ✌

Sources:

• https://www.bostonglobe.com/2020/05/22/marijuana/quarantined-americans-embrace-marijuana-reshaping-an-industry/

• https://www.bloomberg.com/news/articles/2020-05-22/quarantined-americans-embrace-cannabis-reshaping-an-industry

• https://www.cnn.com/2020/05/22/politics/virginia-decriminalizes-marijuana/index.html

• https://floridapolitics.com/archives/335225-florida-cannabis-sales-surged

• https://www.marijuanamoment.net/new-york-governor-says-i-believe-we-will-legalize-marijuana/

• https://nypost.com/2020/05/22/cannabis-stocks-soar-on-hopes-pot-wards-off-coronavirus/

• https://nypost.com/2020/05/21/scientists-believe-cannabis-could-help-prevent-treat-coronavirus/

Cannabis Stocks Subreddit: https://www.reddit.com/r/weedstocks/