Medical marijuana stocks have been hot for some time. The best ones to buy, in my opinion, are biotech stocks involved in medical marijuana research. Others say the best marijuana stocks will be those capable of taking advantage of the legalization of recreational marijuana use in the US and Canada.
Finding Hot Medical Marijuana Stocks
One of the best tools I have found for finding hot marijuana stocks is Trade Ideas. The software has a dedicated channel bar for marijuana stocks.
In addition to an index of marijuana stocks, there are also trading strategies that alert when a signal is triggered. You can also create your own long/short strategies to suit your needs.
The beauty of Trade Ideas is it can be left to run in the background, with the knowledge that it will alert you when a stock matches your trading strategy.
Another data point that Trade Ideas uses really well is volume data. In particular, heavy volume in the first 5 to 15 minutes. Signs of big volume in a stock should be a heads up to pay attention. I rely on volume heavily, and will always try to investigate the reason behind it.
The ‘Volume Trends’ screenshot below should alert you to any possible moves that may be starting.
Warning: as there are many small marijuana businesses, some are listed on the OTC (over-the-counter) market. A few of these have been used for pump and dump scams. I’m not saying all companies on the OTC are bad, but it’s just easier to stay away from OTC stocks. Focus on quality companies on the main exchanges in the US and Canada.
Unfortunately, whenever there is a new market and opportunity, there will always be those looking for a quick buck, rather than providing a great service.
Medical Marijuana Stocks And The Law.
In Canada, medical marijuana use has been legal since July 31st 2002. Recreational marijuana use will be legalized on July 1st 2018.
In the US, 29 states have legalized medical marijuana use, and 9 states have legalized recreational marijuana use.
However, In the US, at the federal level, marijuana use is still illegal. But under the Obama Administration, there was a policy that federal law-enforcement officials would not interfere in states that had legalized marijuana.
On Jan 4th 2018, Attorney General Jeff Sessions rescinded that order. It remains to be seen how ‘enthusiastically’ this will be enforced, but it has certainly created trading opportunities, both long and short, with marijuana stocks.
Note: This shouldn’t affect biotech companies researching cannabis compounds, or Canadian marijuana stocks.
You have heard me mention ‘long/short’ a few times in this article. That is with good reason. Any time any sector gets overheated and has a rapid parabolic rise, there will be shorting opportunities. This is exactly what I’m seeing now with the Marijuana index (Jan 2018).
Marijuana stocks will have plenty of long/short opportunities in 2018.
I was going to write about recreational marijuana stocks, but for some strange inexplicable reason, I’ve got the munchies.
So in the meantime, take a look at Trade Ideas for medical marijuana stocks (and recreational), with trading strategies and alerts included.