MSOS Is Winding the Spring — Something Big Is Brewing

 

This week should be a very interesting one for cannabis stocks, because I believe we may be getting close to a move that finally ignites. Above is a weekly chart of MSOS, and the very first thing that jumps out at me is the presence of back to back inside weeks. When you see this type of price action, it tells you the market is tightening up. Over the past three weeks, the trading range has continued to narrow, and many times this kind of contraction is exactly what precedes an explosive move.

What makes these inside weeks even more compelling is where the weekly closes are occurring. Each of the last few weekly closes has been within roughly five cents of one another. In my opinion, that’s not a coincidence. It shows a real equilibrium between buyers and sellers, where neither side has been able to gain the upper hand. When markets reach this type of balance, they rarely stay there for long. Eventually, something gives.

Now, does this mean I’m predicting that a major catalyst is guaranteed to appear this coming week? Not at all. Markets don’t need official news to move. Sometimes the anticipation of news is enough. Traders may start positioning ahead of a potential announcement. Maybe rumors begin circulating that Pam Bondi is close to finalizing rescheduling. Maybe the White House provides an update. Or maybe nothing concrete happens at all. Regardless, when price contracts this tightly, even a small spark can start a move that snowballs quickly.

As I’ve been saying for weeks, the key level I’m watching is $5. That level is my line in the sand. I want to see MSOS trade $5.01 bid before I add to my long position. A clean move above $5 would tell me that buyers are finally stepping in with conviction and that the market is ready to resolve higher. Until then, patience is required.

At the same time, I’m not ignoring the downside. It’s entirely possible that we head lower first, especially if the market decides it wants to fill the gap sitting below current prices. That scenario wouldn’t surprise me, and it wouldn’t invalidate the larger setup either. Consolidations can break in either direction before the real move unfolds.

The main takeaway for me is simple: this market is contracting, volatility is being compressed, and a meaningful move is likely right around the corner. Whether it happens on a headline or simply on positioning and anticipation, I’ll be watching closely.

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AAPL’s $11 Weekly Pattern: What History Tells Us About Next Week

 Above is a weekly chart of AAPL, and in the lower pane, I’ve added a histogram showing the difference between each week’s close and its open. Over the past 15 months, I’ve noticed an interesting pattern that I want to share with you. Whenever AAPL closes the week $11 or more away from its weekly open, the stock has a tendency to rally the following week. Put another way, if Friday’s close is $11 lower than Monday’s open, buying at the next Monday’s open and holding through Friday has historically resulted in a positive return.

Looking back, this scenario has occurred seven times in the past 15 months, and each time the stock rallied the following week. I find it fascinating because it provides a simple, mechanical edge that doesn’t rely on guesswork or market timing. Of course, nothing is guaranteed in the markets, but having a repeated pattern like this can help guide trading decisions and improve probabilities.

That said, AAPL has been showing relative weakness versus the broader market lately, so it will be particularly interesting to see if this pattern holds. Sometimes even historically reliable patterns can fail when the underlying trend of the stock is weak compared to the market, which is why I like to watch relative strength alongside price-based patterns.

For me, these kinds of observations are exactly what makes trading exciting. Patterns, edges, and setups like this give structure to the otherwise chaotic world of stocks. I’ll be closely watching AAPL in the coming week to see if history repeats itself and whether a clear setup emerges based on this weekly close/open pattern.

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RDW Approaches Resistance as I Wait for a Better Entry

Above is a daily chart of RDW, and as you can see, the stock continues to trend higher, closing at 10.98 on an increase in volume. That’s exactly what you want to see when a stock is in an uptrend, higher prices being confirmed by expanding participation. Despite that strength, I’m staying patient here and resisting the urge to chase. With price moving closer to the $12 resistance area, the risk-reward no longer favors jumping in at these levels.

Instead, I’m focused on waiting for a constructive pullback. If you look closely at the chart, you’ll notice I have the 13 EMA of the lows plotted. This isn’t some random moving average I pulled out of a hat. Over the past couple of months, this average has done an excellent job capturing the short-term swings in RDW. In December, it provided near perfect support on the last two pullbacks, making it a level that clearly matters to the market.

Right now, that 13 EMA of the lows is approaching the $9 area, which also lines up with potential horizontal support. When multiple forms of support converge like that, it’s something I pay close attention to. That zone becomes a high interest area where I want to see how price behaves, not a place where I blindly buy.

My game plan is simple, I’m waiting for a pullback into the $9 area and then looking for confirmation before getting involved. That confirmation could come in the form of a trendline break on a lower timeframe, a bullish reversal candle, or some other clear sign that buyers are stepping back in. Until that happens, there’s no trade for me.

For now, RDW remains an important stock on my watchlist. Strong trends often reward patience, and I’m content to let the stock come to me rather than chasing it higher. Let’s see what next week brings

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Using Relative Strength to Find Your Trading Edge

 What is relative strength

Relative strength is a way of measuring how a stock is performing compared to something else, usually a broad market index like the S&P 500. Instead of focusing only on whether a stock is going up or down, relative strength asks a more important question: is this stock outperforming or underperforming the market? A stock can be rising in price, but if the market is rising faster, it is actually showing relative weakness. Conversely, a stock can be flat or even down slightly while still displaying relative strength if it’s holding up better than the broader market. Relative strength helps identify where money is flowing and which stocks are truly leading.

Why should we use relative strength

Using relative strength gives traders and investors a clear edge because it lets us focus on stocks that are actually outperforming the market. Rather than chasing price alone, we look at performance in context. A stock making new highs might seem strong, but if the broader market is moving higher faster, it’s relatively weak  and that can be a warning sign. By concentrating on stocks showing true relative strength, we align ourselves with where money is flowing, which often precedes sustained moves. This approach also helps us avoid weak stocks that may temporarily rise on hype but fail to keep pace with the market. Over time, consistently trading with relative strength increases the odds of being on the winning side of trends and reduces the risk of buying into underperformers. It’s a straightforward, discipline based tool that provides a measurable advantage in decision making.

What does relative strength look like

Relative strength becomes clear when we compare a stock’s price action to the broader market, such as the S&P 500 (SPY). Let’s look at an example with points A and B. At point A, the stock makes a low while SPY also makes a low. Later, at point B, the stock forms a higher low  meaning it doesn’t drop as much as it did before  while SPY makes a lower low, declining further. This divergence is a classic signal of relative strength. Even though the stock may still be moving down slightly, it is holding up better than the market. The higher low in the stock compared to the lower low in SPY shows that buyers are stepping in sooner and stronger, while the broader market is weaker. Identifying patterns like this consistently allows traders to spot leaders and laggards before price alone makes it obvious.

How the Ratio Line Reveals Relative Strength and Weakness

Another effective way to measure relative strength is by using a ratio line of a stock versus the SPY. A ratio line is simply the stock’s price divided by SPY, and it gives us a clear visual of performance relative to the overall market. When the ratio line is rising, it tells us that the stock is outperforming SPY, it’s gaining ground faster than the broader market. You can see this clearly on the left side of the chart, where the ratio line is trending higher alongside rising prices.

However, take a look at point A. Not only did the ratio line begin to trend lower, but it also broke its recent low before the stock itself did. This is an important observation because it signals that the stock is starting to underperform relative to the market, acting as a sort of leading indicator. The ratio line is giving us an early warning before price confirms the weakness. Sure enough, the stock eventually continued lower, confirming the underperformance that the ratio line had already highlighted. Using ratio lines in this way provides a real edge by showing relative strength or weakness ahead of price action.

Final Takeaway

Relative strength is a simple but powerful concept that can dramatically improve how you view the market. By comparing stocks to the broader market, you gain clarity on where true strength and weakness exist, rather than relying on price alone. Whether you’re analyzing higher lows, divergences, or ratio lines versus SPY, relative strength helps you identify leaders early and avoid laggards. Over time, consistently focusing on relative strength can provide a real edge by aligning you with institutional money flow. It won’t eliminate losses, but it does stack the odds in your favor. In the long run, trading and investing become less about prediction and more about consistently following strength.

If you want to see more examples of relative strength in action, you can find more analysis at 

The Relative Strength Trader

TLRY: Another Patience Test for Cannabis Traders

What a disappointing day in TLRY today. Coming into the session, I actually felt fairly constructive after earnings yesterday. The numbers themselves looked ok to me  maybe not great, but at least slightly positive  and the market initially seemed to agree. After-hours we saw an explosive move higher, followed by a period of consolidation, and then a slow, steady grind higher in the pre-market that pushed the stock as high as 10.45. That type of action usually gets my attention, especially in a sector that’s been starved for real momentum.

As you know, I’ve been watching the $10 area very closely and treating it as a clear line in the sand. If TLRY could open and hold above $10, I was interested in buying if the right setup presented itself. Below $10, I had no interest in forcing anything. Levels like that matter, particularly in names that can turn on a dime.

Unfortunately, the open couldn’t have gone much worse. We opened at 10.05, pushed to a quick high of 10.10, and then within the first minute the stock was already trading below 9.80. From there it was just a steady trend lower for the next 30 minutes, with sellers clearly in control. Once that initial damage was done, TLRY spent the rest of the day moving sideways and eventually closed on its low. After the promise shown pre-market, that type of follow-through or lack thereof  is incredibly frustrating.

Cannabis stocks really have a way of testing your patience. Just when it feels like there might be a spark that could ignite a meaningful move, the whole thing falls apart almost immediately.

One thing I do want to point out, though, is what’s happening around the earnings reaction. At point A on the chart is where earnings were released, and the explosive move higher from that area suggests a demand zone with unfilled orders. At point B, price came right back down into that same zone and, so far, appears to be holding. Because of that, heading into Monday, I want to see the 9.00 to 9.10 area hold as support.

Despite all of this, my broader view hasn’t changed. These stocks are volatile, headline driven, and often unforgiving in the short term, but I remain bullish on the cannabis sector over the long run. Days like today are aggravating, no doubt, but they don’t invalidate the bigger picture. For now, it’s about patience, discipline, and respecting levels even when the market does everything it can to test them.

For more analysis and market insights, visit my homepage