Before AI and EVs took center stage, the cannabis sector was the talk of the town.
Up until last week, pot stocks were more or less dead.
But they’ve made a roaring comeback.
In fact, several of my students, including myself, jumped into some promising trades yesterday.
And while we saw massive moves in symbols like ACB and CGC, there’s reason to believe the rally has legs.
So…let me share three strategies to help you take advantage of this revitalized sector.
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Are Weed Stocks Back?
Here’s the background information, which started getting attention on August 30th.
- Biden administration reviews federal marijuana treatment.
- The federal agency is considering rescheduling marijuana to a lower level.
- Potential effects include changes in taxation, interstate commerce, and research.
- Department of Health and Human Services (HHS) prompts the Drug Enforcement Agency (DEA) to review marijuana’s classification.
- Marijuana is currently categorized as Schedule I; DEA might move it to Schedule III.
- Rescheduling could ease business tax burdens and allow interstate commerce.
- Banking services for the industry won’t be automatically available post-rescheduling.
- SAFE Act in Congress might address banking issues.
- Senate Majority Leader Chuck Schumer emphasizes the goal of ending federal prohibition.
Then there was this tweet last week that sparked a nice little rally in some pot stocks…
I love this kind of setup…
A known catalyst is on the way.
Yesterday, we saw NICE squeezes in CGC, ACB, SNDL, TLRY, and CRON ticker symbols.
3 Ways To Play The Potential Rally In Cannabis Stocks
#1 Panic Dip Buying
This has been my favorite way to play short-squeeze stocks this year. It becomes trickier when trading cannabis stocks because most are heavily diluted. In other words, they have a ton of outstanding shares compared to low floats, which are easier to squeeze.
Nonetheless, there is a potential catalyst in the works.
And it appears traders are trying to get ahead of the news, causing pot stocks to catch a bid.
I’ll be looking at potential dip buy opportunities throughout the week.
#2 Sympathy Plays
Since this is sector-related news and not stock-specific, there might be an opportunity for some sympathy plays.
A sympathy play refers to a situation where one company’s stock moves in response to the price action of another related company. This typically happens to companies within the same sector or industry.
For example, yesterday’s leaders were ACB, with the stock up over 70% at one point…and CGC, up over 56%.
I didn’t trade either of those. Instead, I looked at a sympathy play in the TLRY ticker.
If you put together a watchlist of stocks in the sector, you can see which one is leading and lagging. If we see strength, we can buy the weakest performer and hope it catches up.
#3 Momentum Breakout
First, always hunt for those big, meaningful breakouts. I’m talking about stocks that tease resistance for days but then blast through a key level.
That’s where the magic happens.
Don’t get caught just playing one tune – diversify your knowledge!
Know your patterns, whether it’s the morning panic dip buys, multi-day breakouts, or those juicy OTCs popping with news and volume.
However, don’t get greedy!
Stick to what you know best. Trade smart, not hard – that means capturing the action in the morning or afternoon and avoiding those midday fakeouts.
When you spot a breakout, make sure it’s a solid, no-nonsense move, like when breaking news hits or a stock bulldozes a crucial level.
Lastly, always have an escape plan. Sell into strength offload when everyone else is diving in.
This way, you’ll bank more profits and keep those risks at bay.
Remember, trading’s not just about playing the game. It’s about playing it smart!
How Are My Students Playing Pot Stocks?
Are you curious about the strategies my top students are employing right now?
Look, trading isn’t just about the stocks; it’s about timing, understanding the sector nuances, and, most critically, the strategies behind each play.
Here’s the insider scoop: Successful trading in this sector is not purely based on luck or gut feelings.
It’s a blend of experience, expertise, and real-time market analysis.
The question is, do you want a piece of that knowledge?
Together, we’ll break down the current cannabis sector plays, analyze the hottest trades, and arm you with tactics that have been proven time and time again.
The cherry on top? This wealth of information is yours to grab, absolutely free.
Just come with an eagerness to learn and a passion to up your trading game.
Ready to unlock the secrets of trading the cannabis sector effectively?
Your next big trade could be just around the corner.
Don’t miss out!