Long Weed As We Will See Unwinds In Popular Shorts

Great setup to go long weed stocks right now. This may seem counterintuitive during what looks to be a coming market selloff and fears over recession, but this is shaping up to look as a great mid-term trade.

Some Quick Thoughts...

• From a chart pattern perspective, this chart is almost a perfect "v" type dip, with accelerating selloffs eventually leading to a very large short positioning and sentiment extremely negative.
  
• The selloff has left this extremely oversold on all levels. Even if weed continues to be a shit investment, it will likely see a rebound, which is mostly what we're playing here.
  
• As a popular short, it may outperform during a broad based market selloff. We saw many factor reversals recently, and during 2018, we saw many popular shorts actually rise during the big selloff as Hedge Fund redemptions forced funds to sell their momentum longs, and cover their momentum shorts. TSLA was a great example of this last year.
  
• This has hit Demark 13 exhaustions on both a weekly and daily level.
  
• Today's selloff saw this outperform popular market indexes and end in the green despite the rest of the market being taken to the woodshed. It's a decent indicator that the marginal seller is no longer here.
  
• We are hitting the lower long term trendline in a widening pattern. These are almost always good for a bounce. Set a stop loss if you want some protection here.
  

Just note this is a trade. Not necessarily a long term thesis on owning weed stocks.

Comment:

Also another note worth mentioning... with election coming up, we will be seeing more weed legalization news come, providing further upside catalysts. The downside analysis isn't wrong, but sentiment is already pretty washed out here.