Cannabis has seen a huge increase this year as the Biden administration took office.
Though it is not completely clear if the Federal government will push for widespread legalization, the last bill to further decriminalize cannabis makes it easier for states to push their own legalization agendas. With 11 states making it available for recreational use, the trend has a lot more room to grow.
More importantly, the cannabis sector and select cannabis stocks have come off highs and are now consolidating over their major moving averages.
The chart below shows the alternative harvest ETF (MJ) which holds both U.S and Canadian cannabis companies.
Back in late February it put in highs around $34 and from then proceeded to have a 40% plus correction down to the $19 area. While this is a decent pullback, MJ never closed underneath its 50-day moving average. From a technical standpoint this looks good as the brief dip under the 50-DMA was never revisited.
The only caveat is found on the weekly chart for this ETF containing cannabis stocks…
The 200-weekly moving average (Green line) is currently at 25.10. This is a pivotal level for price to clear or fail tomorrow.
If this price level can’t be cleared it may take more time and consolidation between the 50-DMA and the 200-WMA before the move upwards it ready.
Luckily, the momentum is leaning in a break of resistance as the both the 50 and 200 daily moving averages are sloping up.
S&P 500 (SPY) New highs.
Russell 2000 (IWM) New highs. Like to see 230 as new support.
Dow (DIA) New Highs. 320 new support.
Nasdaq (QQQ) Main resistance 320 the 50-DMA
KRE (Regional Banks) 68.24 support area.
SMH (Semiconductors) 236.71 resistance.
IYT (Transportation) New highs.
IBB (Biotechnology) Main resistance 160.34 the 50-DMA
XRT (Retail) 93.48 pivotal area.
The author may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.