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, its 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 space has come off its highs and is now consolidating over a major moving average.
The above chart shows alternative harvest ETF (MJ), which holds both U.S and Canadian 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.
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 is ready. Luckily, the momentum is leaning in a break of resistance, as the both the 50- and 200-day 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
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
