Every morning before the market opens I spend about an hour looking through the charts of all the stocks and ETFs that I follow. This morning I was looking back at how some of the bounce plays I mentioned in the my “August Bounce” video. Many of the ARKK-related plays had large runs, such as AXON and ADBE. However one ETF looked slightly different to me this morning… MSOS.
MSOS is the ETF that tracks U.S. based cannabis companies. The ETF has had a bad run. It’s high was at 55.91 in February of 2021. Over the past year and a half it has lost about 80% of its value. With that said, it has a number of tail winds that should support the stock in the intermediate and long term.
First, I like the higher low. In my opinion the structure of this bottom is different than the bottom seen on /ES. This may be a bottom to go up out of. By next summer I like the idea of getting back up to the red line in the chart. That would be about a 50% rise from current levels.
Next, it has been a hot topic this year that Congress is attempting to legalize cannabis. Specifically what will be of great importance to MSOS will be the passage of banking reform as it relates to cannabis businesses. When this reform gets passed, this space should be transformed into a bullish dynamic, possibly for a decade to come.
Senator Corey Booker has been leading the charge for cannabis reform in the Sentate. You can read his latest update here. The article states:
“But since filing the Cannabis Administration and Opportunity Act (CAOA) last month, the senators have softened their stance, expressing their willingness to reach a compromise on a passable package of marijuana reforms that’s been described as “SAFE Banking Plus. The details of that in-progress cannabis omnibus bill aren’t known yet, but it’s expected to contain equity components like bipartisan marijuana expungements proposals—and it’s conceivable that lawmakers could also push to incorporate SAFE Banking amendments as outlined by the new CRCC paper.”
“Shaleen Title, a co-founder of CRCC and former Massachusetts cannabis regulator, said during Wednesday’s virtual event that the reason she’s optimistic about SAFE Banking “for the first time” is because “legislators and their staff and the public seem to have shifted on this versus, say, six months ago” when equity considerations weren’t receiving serious attention in the context of the bill.”
Finally, I will leave you with this tweet from Jesse Felder from last December. Enjoy yourself, and I hope you have a great weekend!
