Before we start, just want to give a big h/t to our intern @GrantHawkridge for helping out bigly with this research and post.
Some might even call this post a...JOINT venture.
We'll be here all week.
Now, let's get into the charts.
First, let us start at the industry level with the Alternative Harvest ETF (MJ). There is nothing bullish about this chart and made no progress in 2020. Prices have re-tested resistance multiple times, however, each time sellers came in and defended that level.
For now, the benefit of the doubt goes to the bears as this is a sideways trend at best, at least until prices can get above this 15-16 range.
Click on chart to enlarge view.
On a relative basis, this thing is sitting near all-time lows relative to the S&P 500. Momentum is diverging positively, but there's still a lot of work to do before we can see a broad-based outperformance from this industry group.
Upon analyzing the charts of the ETF’s components, we continue to come to a similar conclusion. At the index level prices are making some progress in reversing their downtrend, but there is still a lot of weakness in the individual stocks that comprise the index.
As a result, we want to remain very selective in this space and only own those showing relative strength and absolute price momentum.
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