NFTRH+; this sector is bottoming; 5 individual stock charts

The US Cannabis MSO sector has bottomed for an interim low at least. Last year I entered too soon and stuck with it too long (as politicians sit on their ample behinds with respect to Federal legalization). Well, it’s another year and it’s a potential bottom in place. However, the sector is starting to get overbought in its bear market rally.

Reviewing a leader, GTBIF, which I messed up in not buying (too late now), it is getting quite overbought on the daily time frame as it approaches a logical objective at the DOWN trending SMA 200. That is important because this could all be just a false dawn if the sector does not take out its SMA 200s and change the trends. It is also very possible that the sector has bottomed on the longer-term (my guess is that it has) but would be subject to some back testing. Using GTBIF as an example that could come in the form of a pullback to the SMA 50, which should start rising toward support around 10 to 10.50.

CRLBF is one I did buy, and buy well. Currently at a 25% profit I am tempted to sell but am instead holding for the moment (while keeping my failure to take a large DVAX profit in mind). That does not mean you should decide to hold if you happened to buy it too. 25% is a nice chunk of profit in a bad market.

CURLF was also added and I may think about profit taking if/as it hits the SMA 200. However, you could also read an inverted H&S into it with the left side shoulder in May, the Head in June-July and the right side shoulder in August. If it is an iHS the theoretical target would be around 8.25. Okay, maybe I am not so eager to sell.

TCNNF was the most recent add and appears to be just lately getting itself together for a rally. I’d like to think the target is the SMA 200, but that’s a man staring at a chart. Last week it broke through resistance at around 13.

PLNHF is more of a specialty MSO, but it is pursuing plans to expand beyond its niche in Las Vegas. I have it on watch for a time when I feel rock solid that the sector has bottomed. No rush at this time as it – like many of its amigos – struggles with slowing consumer demand due to inflation.

The wild card to all of the above of course is Federal legalization. If that were to happen I’d expect the US MSOs to ramp upward almost regardless of what the broad market is doing.

A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the technical parameters are already noted. These updates are meant as a starting point for your further research if interested. I will not personally buy every item highlighted and will sometimes sell (ref. Trade Log) any item that I do buy below target (assuming I’ve not stopped out or sold for some other reason) as I often do. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.


This Post Has 5 Comments

  1. Barden

    Gary, off-topic here but could you indicate what the mechanics of short positions are with your broker? (Recently indicated in your trading log for TSLA, ENPH, AAPL etc )
    Such as, whom do they borrow the stock from and for how long? On margin? Do they borrow your stocks too without telling you? Or do you buy put options? Thanks in advance

    1. Gary

      I keep a small margin trading account so that I can short. I keep the other account free from margin (and thus, the ability to borrow shares to short). That is because I remember years ago some info about how a margin account exposes you to some potentially nasty games played by brokers.

      As for the mechanics, I am not that sophisticated. They borrow the shares but I’ll be darned if I know from where. I try not to use options because I am better with owning/shorting actual stock where my trade parameters are concerned. I use options once in a great while to hedge.

    2. Gary

      Also, this is a good opportunity to repeat that I am not a very good trader. Probably because I don’t want to be. So I don’t really know some of the things that pure traders know (other than the little voice in my head that is Reminiscences of a Stock Operator, read many years ago).

      I have a poor psych profile to be a short/bear and I have no interest in looking at live charts all day long. My interest is almost completely on the macro markets and where they are going. i.e. the boom, bust and interim cycles. I’ll bet that a good percentage of subscribers are more astute traders than I am.

  2. Barden

    Thanks for the info.
    On topic now: In my notes but can’t remember whether from you:
    2 Cannabis sector ETFs are:
    ETFMG Alternative Harvest ETF (MJ) and
    AdvisorShares Pure U.S. Cannabis ETF (MSOS).
    MJ invests globally, MSOS in the US only.
    MSOS contains TCNNF GTBIF CURLF & CRLBF as the top 4 holdings
    (from an older article in “The Street” April 20, 2021 comparing the two).
    Could be labor-saving.

    1. Gary

      No me. I know MJ and the other I know about has a goofy symbol, YOLO. But I obviously like MSOS’s holdings profile since those are my exact target stocks, plus PLNHF.

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