Stock Markets Analysis & Opinion

A Different Commodity: The Canna Trade Sets Up

One of the more frustrating trades this year has been the back-and-forth rallies and sell-offs in the cannabis sector.

MSOS the ETF for US Cannabis since the beginning of 2024, has rallied over $10.00 a share on news of decriminalizing cannabis only to fall back to $8.00 and now $9.00 a share once the news becomes more of a speculation.

One could say that cannabis has been the biggest political football, even more than Bitcoin!

This past week Biden said,

“So today, the @TheJusticeDept is taking the next step to reclassify marijuana from a Schedule I to a Schedule III drug under federal law.”

VP Harris chimed in with,

“Currently marijuana is classified on the same level as heroin and more dangerous than fentanyl. We are finally changing that,” Harris said. “We are on the road to getting it done.”

are the operable words.

This led us to have a look outside the Cannabis ETF and the basket of companies that are already involved with legalized pot, either medical or recreational or both.

In 2018, the CEO of Philip Morris said that the “company is keeping clear of the cannabis industry.” He also said that the company is “pushing to create a smoke-free future.”

Then in 2021, the company announced that they would join other cigarette producers that have already jumped into the cannabis industry.

In 2023, PM acquired for $650 million, an Israeli company called Syqe Medical, a cannabis inhaler development company, the only metered-dose medical cannabis inhaler that delivers a precise dose of THC.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

While the US government swings back and forth on legislation, the big tobacco companies are taking note and ready to pounce.

Looking at the daily chart, Philip Morris (NYSE:PM) has had a substantial rally from $89 in mid-April to $100.00 plus this past week.

Before Covid the stock was hovering around $70. Then, in 2021, PM peaked at just above $112.

The all-time high happened in May 2017 at $123.55

PM is currently trading on par with the S&P 500 (Leadership indicator).

Real Motion shows momentum waning a bit with a reversion to the mean sell (a failure of the Bollinger band.)

At the end of April 2024, PM cleared back over the January 6-month calendar range high (horizontal green line), which puts this stock in a more longstanding uptrend.

On the weekly chart, the $100 as the key pivotal level is what to watch.

Note how the 50 and 200-week moving averages are converging. Bulls want to see the 50-WMA remain above the 200-WMA.

With this past week’s close right around $100, we have this stock on our radar for the coming week.

Perhaps the most intriguing chart is the monthly one.

Over the past few weeks, I have written extensively about the 23-month moving average.

When an instrument clears above or breaks below that average, it is either signaling a short-term (2-year) business cycle expansion or contraction.

With Philip Morris, this month, it handily cleared the 23-month MA (blue line).

Hence, we must consider that should PM remain above the 23-month MA going into the end of May and into June, that $100 level is not only a great launching point, but also becomes technical support.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

Educational purposes only, not official trading advice.

ETF Summary

  • S&P 500 (SPY) Consolidating near all time highs
  • Russell 2000 (IWM) 210.80 ATHs remain slightly elusive
  • Dow (DIA) 40,000 now pivotal
  • Nasdaq (QQQ) Consolidating near all time highs
  • Regional banks (KRE) Can this clear the 23-monthly MA?
  • Semiconductors (SMH) Consolidating near all time highs
  • Transportation (IYT) 64 support 67 resistance -still weak
  • Biotechnology (IBB) 135 support 140 next resistance
  • Retail (XRT) 75 key support
  • iShares iBoxx Hi Yd Cor Bond ETF (HYG) 77.00 once again pivotal support


Похожие статьи

Добавить комментарий

Ваш адрес email не будет опубликован. Обязательные поля помечены *

Кнопка «Наверх»