Marijuana stocks have been on a rollercoaster ride in recent weeks, as new investors have entered the sector with thoughts of becoming instant millionaires.
Some investors have the potential to make millions, but most will lose their shirt. The reason is that marijuana stocks are very volatile and often move mostly on sentiment as well as on market mechanics. An average investor does not understand market mechanics. Further complications arise for marijuana investors from pump-and-dump schemes.
One of the best tools is to look at X-rays of popular marijuana stocks in the form of segmented money flows. Money flows provide an edge to investors who want to beat the market and lower their risks. Let’s explore the issue by looking at money flows with the help of a chart.
Chart
Please click here for an annotated chart of money flows in 11 popular marijuana- and cannabis-related stocks. As a group, these stocks do not move with the Dow Jones Industrial Average DJIA, S&P 500 SPX and Nasdaq 100 NDX. That can provide important diversification. Please observe the following from the chart:
• Momo (momentum) crowd money flows are extremely positive in Cronos Group CRON and Tilray TLRY stock. In contrast, smart money (professional investor) flows are extremely negative in Tilray and negative in Cronos Group. Please read “Tilray is the poster boy of short-squeeze stock candidates — here’s how to find others.”
• Momo crowd money flows are positive in Canopy Growth CGC stock, Aurora Cannabis ACBFF, Aphria APHQF, Neptune NEPT and The Green Organic Dutchman TGODF.
• The Green Organic Dutchman is the only marijuana stock where smart money flows are not negative.
• In popular marijuana ETF MJ smart money flows are very negative but momo crowd money flows are positive.
• New Age Beverages NBEV stock has lately been the favorite of the momo crowd. Momo crowd money flows are positive, but smart money flows are negative. Please note that the potential of a short squeeze that can move a stock up is extremely positive. For more on New Age Beverages, see: “The new ‘Tilray’ marijuana stock is here — this is how to set up the trade.”
• Among pharmaceutical-related marijuana stocks, smart money flows are negative and the potential of short squeeze is positive in GW Pharmaceuticals GWPH stock….Read more at MarketWatch.
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