Cannabis Stocks Keeping Momentum
Executive Summary
Charting Man Dan analyzes the cannabis sector's emerging relative strength and resilience amid broader market weakness. He outlines a technical bull thesis centered on a monthly equilibrium base in MSOS and outperformance in key names like Trulieve (TRLV) and Cronos (CRON), while warning traders against bagholding fundamentally diluted names or expecting unrealistic 1,000% returns due to immense overhead bagholder supply.
Entities & Tickers Mentioned
Price Targets
- ✓MSOS established a confirmed weekly bull flag and is holding weekly EMA 12 support, consolidating constructively above the critical $5.00 level.
- ✓TRLV continues to benefit from major structural passive fund flows and institutional liquidity via uplisting.
- ✓Sector names put in a synchronized fear bottom coinciding with the broader market's early August low, indicating macro correlation and responsive dip-buying.
- ✓Ratio charts show CRON hitting multi-year highs and maintaining support on monthly EMA 12, reflecting strong underlying capital positioning.
- ✗Massive overhead supply from historic bagholders waiting to exit at break-even ($8, $10, $24) will severely suppress parabolic continuation.
- ✗MSOS ETF active rebalancing and heavy selling of Green Thumb (GTBIF) creates persistent institutional supply drag.
- ✗Historic dilution and share issuances across legacy Canadian LPs (TLRY, CGC, ACB) have structurally capped upside potential relative to previous bull cycles.
Key Talking Points
- Cannabis showed rare relative resilience and green action while 75% of the NYSE traded in the red.
- MSOS is forming a high-probability monthly equilibrium bottom pattern, with key support at $4.68 and a critical breakout level at $5.97-$6.00.
- TRLV continues to demonstrate lead bull relative strength following its uplisting, with weekly EMA 12 serving as the primary trailing trend guide.
- Glass House (GLAS) was cut after double-topping at all-time highs and displaying aggressive relative weakness below $8.41 resistance.
- Heavy retail favorites like Tilray (TLRY) and Canopy Growth (CGC) have suffered from multi-year dilution and lack relative strength compared to cash-rich names like CRON.
- A failure to secure regulatory catalysts (such as Schedule 3) before midterms, or losing $5.00 on MSOS, would quickly sour sector sentiment.
Unique Contrarian Opinions
"Expectations of 1,000%+ multi-bagger moves back to all-time highs are unrealistic due to massive bagholder overhead supply and share dilution; traders should prepare for a long-term lower high around 200% gains."
Credibility: 4/5Rationale: Empirically supported by market microstructure: unlike 2017-2018 blue-sky discovery phases, years of declining prices created large trapped volume cohorts ready to sell at break-even.
"Popular retail favorites like TLRY and CGC are structurally broken dilution engines that should be avoided in favor of cash-rich or relative strength leaders like CRON and TRLV."
Credibility: 4/5Rationale: Historical outstanding share counts and debt-to-equity conversions over the past four years clearly substantiate ongoing per-share value destruction in those specific names.
- →Official finalization of DEA Schedule III rescheduling
- →Additional MSO uplistings to major US or Canadian senior exchanges
- →Potential midterm election political headlines or federal reform announcements
- !MSOS breaking below critical weekly support of $4.68 or failing to hold the $5.00 psychological level on backtests
- !Broader equity market correction and rising interest rates reducing speculative retail liquidity
- !Prolonged absence of legislative or administrative cannabis reform headlines heading into late Q4