Pot ETF About to Light It Up

Hey There Income Hunters,

It’s time to procure a bullish position in pot stock


The market has corrected almost 25% since mid-July, and there is good news from the Biden administration that will give the market a boost.

In a letter to Congress last week, the Office of National Drug Control Policy (ONDCP) proposed making it easier to research marijuana and other Schedule I substances.

This is a very good step in support of the medicinal benefits pot can bestow on society.

And the Drug Enforcement Administration (DEA) firmly believes in this support as a necessary step towards the Food and Drug Administration (FDA) approval of new drug products.

Today, I’ll pass two pot stocks I like, plus the technical pattern that provides a bullish signal for buying one now.

Biden Supportive of Moving Pot to a Schedule II Drug 

This makes total sense, since pot continues to be a Schedule I drug, while cocaine is rated less dangerous as a Schedule II (see table below) …

Table Description automatically generated

Today, the pendulum has swung, as politicians push for any tax revenue and new jobs they can find (among other reasons).

Build a portfolio of stocks that have corrected and will profit from federal decriminalization that, although delayed in 2021, will come in 2022 as Democrats must find ways to pay for all their fiscal fireworks.

The CBD industry alone is expected to grow at a compound annual growth rate (CAGR) of 40.4% for the next five years ….

Here are two stocks that are a buy now:

AdvisorShares Pure Cannabis ETF (Ticker: MSOS) 

MSOS was the first US-listed, actively managed ETF to provide exposure solely to American cannabis and hemp companies, including multi-state operators.

Thirty six states have now decriminalized cannabis for medicinal purposes, while 13 states have legalized it for recreational use.

MSOS is in a strong buy position technically. Notice the move on Friday on higher than average volume …

Chart Description automatically generated

Notice also, the two hammer candlestick patterns registered over the past 4 days. A hammer pattern is defined by:

  • A lower tail that is longer by at least 2x its body 

  • Either a red or green candle color doesn’t matter

  • The upper tail is very small and almost absent 

Hammer candlesticks usually appear in a downtrend. They are generally reliable reversal patterns. And this is an ideal situation for a reversal in trend to happen in the short-term …

Consider a MSOS 33/35 call spread for $.70 to Sept. 17. Closeout the trade on a close below $32.50.

This trade offers a return of 185% if MSOS expires on Sept.17 above $35. Any close above 33.70 nets a profit.

Grow Generation Corp. (Ticker: GRWG) 

GRWG is the pick-and-shovel supplier to many cannabis growers, operating in 12 states today and growing quickly … 

I love this company and forecast them to be the “Home Depot of the cannabis industry” in the years ahead.

GRWG is the perfect combination of a uniquely positioned business with a great strategy for growth as decriminalization sweeps across the country.

The stock is in a stable position and the recent correction makes it a good time to buy.

GRWG has put in a series of higher highs and higher lows,with an uptrend developing … At the lows, a couple of inverted hammers developed on good volume.

The inverted hammer is defined by the same bullish reversal characteristics of the hammer:

Graphical user interface, chart Description automatically generated

Consider a GRWG 33/35 call spread to Sept. 24 for $.66. 

This trade offers an over 200% maximum return and I believe the probability of GRWG reaching $35 or higher is good. If not, use a sell stop below $30.5 to limit your loss.

Bring It Home 

Last week’s employment data opened the window for money to flow into beaten down sectors, and cannabis is one of them.

The disappointment of not passing decriminalization at the Federal level should give way to positioning for passage in early 2022.

This is good timing to jump on a burst of momentum to the upside in both stocks I mentioned today  for a quick low risk/high reward play.

I hope you are enjoying the long weekend and as always …

Live and Trade With Passion My Friends,


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