Oh, we are getting impatient. Wall Street is stuck in neutral and doesn’t appear to be in a hurry to make up its mind, bearish or bullish. The NASDAQ seems to have a hard lid on the top at 14,200 and a soft bottom of 13,000, which has been temporarily broken twice. Otherwise, the NASDAQ has traded between those guardrails for most of 2021.
When prices hit the top, sellers move into action and when it gets to the bottom, buyers get going. Right now, the index is in a minor uptrend within the trading range. However, upward momentum is starting to wane with our measuring stick barely in the buy column. A down day, and our mo’ model slips into neutral territory.
For the last couple of weeks, we’ve talked about the index moving downwards in three parts or 1-2-3. Part one is the initial selloff. Part two is the first recovery, which is the stage we are in now. Part three is the selloff before a reversal to a new uptrend. It’s our opinion that step three could begin this week.
If we are correct in our call, we anticipate the NASDAQ moving towards 13,400-13,200 to complete step three and setting a new pivot point. It might prove to be the right neighborhood to buy the dip. On the other hand, a break below 13,000 would be a big negative in our view and could lead to a full-blown correction. We don’t believe that’s on the table at the moment, but we could change our minds below 12,600.
For now, patience might prove to be the prudent move for investors if Wall Street is on the verge of step three as we suspect. Investors might consider adding an exchange-traded fund like Invesco QQQ Trust (QQQ) if the NASDAQ finds its way to 13,400-13,200.
A mixed bag of sectors checkered out top 10 leaderboard with ETFMG Alternative Harvest ETF (MJ) being the #1 performer. The weed fund got knocked down since peaking in early February. MJ recently ended its downtrend and could be on the verge of Wall Street’s popular list again. Investors who want exposure to the cannabis markets might consider adding ETFMG Alternative Harvest ETF (MJ).
Investors considering cannabis stocks might consider Canopy Growth Corporation (CGC). Canopy Growth engages in the production, distribution, and sale of cannabis for recreational and medical purposes primarily in Canada, the United States, Germany, and the United Kingdom.
CGC was as high as $56.50 in mid-February and as low as $21.72 on May 13, 2021. It trades at $26.09 as of this keystroke. Shares of Canopy Growth Corporation recently broke though a downtrend and momentum to the upside appears to be building. It could take a while, but if the federal government decriminalizes marijuana, allowing access to the banking system, companies like Canopy Growth Corporation (CGC) could benefit greatly along with shareholders.