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Mish Schneider Can healthy growth for cannabis stocks continue?

In this article, Mish Schneider, director of trading research and education at MarketGauge.com, explores the cannabis investing theme and its growth potential.

Cannabis stocks have seen a huge increase this year as US president Joe Biden took office.

Though it is not completely clear if the Federal government will push for widespread legalisation, its last bill to further decriminalise cannabis makes it easier for states to push their own legalisation agendas.

With 11 states making it available for recreational use, the trend has a lot more room to grow.

More importantly, the cannabis space has come off its highs and is now consolidating over a major moving average.

The above chart shows ETFMJ Alternative Harvest ETF [MJ], which holds both US and Canadian companies.

Back in late February, it put in highs around $34 before proceeding to see a 40% plus correction down to the $19 area.

While this is a decent pullback, MJ never closed underneath its 50-day moving average (DMA).

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.

The 200-weekly moving average (WMA), shown by the 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 is ready.

Luckily, the momentum is leaning in a break of resistance as the both the 50- and 200-DMAs are sloping up.

This article was originally published on MarketGauge. With over 100 years of combined market experience, MarketGauge's experts provide strategic information to help you achieve your investing goals.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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