Six Weeks of Compression: Is Cannabis Setting Up for a Move?

 

It was another quiet week for cannabis stocks, but despite the lack of excitement, the group managed to do something constructive. We closed the week on the highs and finished in positive territory. That may not sound like much, but in a market like this, small details matter, especially when they keep repeating.

If you look at the weekly chart above of MSOS, you’ll notice something interesting. This marks the sixth consecutive week where price has closed in a very tight range between roughly 4.75 and 4.90. As I mentioned last week, this kind of action is a clear sign of compression. Volatility has dried up, price has gone quiet, and the market is coiling. From my experience, these periods don’t last forever. When they resolve, they tend to resolve with a directional move.

The longer price moves sideways, the more meaningful the eventual breakout tends to be. Right now, MSOS is doing exactly that, moving sideways frustrating both bulls and bears, and lulling most participants to sleep. That’s usually when conditions are being set for something larger.

Timing is also worth paying attention to. We now have just five trading days left until the end of January. With Pam Bondi expected to finalize cannabis rescheduling, that headline could drop at any time. In my opinion, that’s the potential spark the market has been waiting for. When expectations are low and positioning is light, it doesn’t take much to shift sentiment quickly.

While the broader group has been quiet, a few individual cannabis stocks tested support this past week and appear to be bouncing. That tells me sellers may be running out of urgency at these levels. I’m not seeing aggressive downside follow-through, and that’s another subtle but important clue.

For now, patience remains the name of the game. Compression, quiet price action, and low volatility often precede expansion. The question is whether this is the calm before the storm and if this is the week volatility finally expands. I’m positioned for that possibility and prepared for movement when it comes.

Are you?

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