Buying Stocks In A Strong Sector That Haven’t Broken Out Yet: Cannabis Edition

Cannabis stocks are on fire after TWMJF led off as the first stock to break out.  A hot sector can provide a lot of trading opportunities.  Instead of chasing the leaders in a sector you can often buy laggard stocks that will get pulled higher by the large amount of money pouring into the sector.  This works especially well with commodity sectors where all companies in a sector essentially produce the same product.

OGRMF and SPRWF are two good examples of this as I fired off a tweet about these stocks earlier today.  I bought them both in anticipation they would follow the leaders in the sector higher.

With both stocks you can see clear resistance and support levels just like the leading cannabis stocks, but they hadn’t broken above resistance yet.  Both stocks had great volume today and OGRMF had a nice consolidation at the high end of the range leading into today’s breakout.

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The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Cannabis Stocks Break Out Of A Year Long Consolidation

The three main cannabis stocks that I follow exploded higher on massive volume increases over the past couple of weeks.  Not only that but their recent moves busted them out of a year long consolidation in a very bullish manner.  All three of these stocks were 5 to 6 baggers in 2016, and spent about a year consolidating those massive gains.

Canopy Growth shown below broke out above 10 and has done over 4x average weekly volume the past two weeks.

Aphria is breaking out of the former highs in the 6 to 7 area on over 2.5x average weekly volume the past two weeks.

Aurora Cannabis has had a volume explosion over the past week doing over 5x average volume and breaking out above 2.5.

It’s important to note these stocks are all major Canadian cannabis producers with over a billion dollar market cap.  There are many more speculative cannabis related stocks that are nothing more than management teams with plans and dreams that may or may not turn into anything.

I’m long APHQF and ACBFF as of this writing.  I plan on doing follow up posts on this sector as this appears to be a major breakout that could last a while.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.