Cannabis stocks were able to rebound overall last week after several weeks of selling. While the sector was hit with other perceived “risky” assets in February, most stocks held important support levels and now look set up to begin a new rally higher.
Looking at our current holding, I like that the AdvisorShares Pure US Cannabis ETF (MSOS) held its January low on the recent pullback. This suggests that buyers were plentiful when the ETF dipped to an attractive level, creating a very important floor for the sector.
The broader cannabis ETF, the ETFMG Alternative Harvest ETF (MJ), ended its pullback and had an even better week. This ETF is more concentrated on Canadian cannabis stocks, so to see both the U.S. and Canada turn around at the same time is a great long-term sign for the sector.
The action in cannabis stocks could be a bit tricky over the next couple of weeks, as I expect it will be driven as much by the overall market as the sector itself. If stocks in general can continue their recent rally, strength should flow down to the cannabis sector. If the opposite happens, then the weakness will be felt by most stocks.
I’ll be watching closely. And no matter what happens in the short term, the long-term outlook for U.S.- based cannabis stocks remains very strong.
Until next time,
Editor, Cannabis Cash Weekly