Cannabis Stocks Finally Show a Pulse

 

It’s been a while since I last posted about the cannabis stocks and honestly, there has not been much reason to. For most of the month, the group has done very little. Price action has been choppy, directionless, and mostly drifting sideways to lower. That kind of environment usually keeps me on the sidelines because there is no edge in forcing trades when the sector is not showing any real leadership. Today, though, the action finally caught my attention, and I wanted to share what I’m seeing.

What stood out to me was the intraday behavior in MSOS compared to the broader market. On the 5-minute chart, while the S&P 500 was pressing to new lows for the day around 12:30, MSOS was not following it lower. Instead, it was holding up extremely well and consolidating near the highs of the morning. That immediately got my attention because when a sector refuses to break down while the market is weak, I view that as a sign that something may be changing beneath the surface. To me, that kind of divergence is often an early clue that relative strength is starting to emerge.

As the day developed, that interpretation only became more convincing. MSOS continued to hold its ground, and once resistance was cleared, buyers stepped in aggressively and pushed the ETF higher for the rest of the afternoon. That type of move suggests to me that money was entering the space, not just random short covering or noise. When I see a stock or sector absorb market weakness, tighten up near the highs, and then expand upward once resistance gives way, I pay attention. That is the kind of action that can sometimes mark the beginning of a change in character.

Looking at the daily chart adds even more context. MSOS now appears to have the potential to form a double bottom at 3.53. Of course, that setup is not confirmed yet. For me, confirmation would come with a decisive move through resistance at 4.14. Until that level is taken out, it remains only a possibility. Still, the setup is there, and that alone makes the chart more interesting than it has been in quite some time.

Another thing worth highlighting is volume. Today, MSOX posted its highest daily volume candle of the year. That matters to me because volume is one of the clearest ways to judge conviction. When I combine relative strength with unusually heavy volume, I see that as evidence that money may be rotating into the group.

That said, one good day is not enough. Now I want to see follow through tomorrow. Without that, this could easily turn into another false start, which this sector has delivered plenty of before. Still, I have to admit that today’s action was encouraging, and I’ll be watching closely to see how the rest of the week unfolds.