3 Marijuana Stocks With Budding Trade Opportunities

If you’re asking the question, “what is Wall Street smoking these days?”, you’re not alone. But if it’s green you’re after, look no further than the price charts of this trio of marijuana stocks. Let me explain.

With a gravity-defying broader market now approaching all-time-highs off late December’s almost ubiquitous corrective bottom, it’s enough to give pause to even the most ardent and die-hard bullish investors. Then there are marijuana stocks.

The budding field of marijuana and cannabis are of course poised for huge secular growth. Surging demand for both medicinal and recreational products amid increased legalization — plus in-tow social acceptance and more cleaver and easy ways to enjoy those substances that would leave Cheech and Chong and Jeff Spicoli scratching their heads— are a big business opportunity to say the least.

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Still, as with any new trend which has caught a nice buzz from Wall Street’s sell-side promoting dreamy and easy-going path to profits, the reality is there will be very volatile winners and losers in cannabis stocks. Bearing that in mind, let’s separate the chaff from the wheat or in this case, the bull from the bear and explore three marijuana stocks.

Buy #1: ACB Stock

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My first of two marijuana stock buys are shares of Aurora Cannabis (NYSE:ACB). ACB stock is on InvestorPlace’s Josh Enomoto’s short list of cannabis buy recommendations due to the company’s smart-looking acquisition strategy that’s helping leverage its position within the medicinal side of the business.

On the price chart I’m inclined to digress with Josh regarding an inevitable correction in ACB stock after rallying about 70% on the year. Unlike a marijuana stock like Cronos (NASDAQ:CRON) or Canopy Growth (NYSE:CGC) which have seen big gains in 2019; ACB stock’s big picture shows a name that’s done a good deal more work consolidating its gains in a very large base.

As we can see on the weekly view of Aurora Cannabis, shares are actually trading below where they were kicking off 2018. That’s interesting, but not necessarily bullish. What’s making the case for seeing higher prices in ACB stock are back-to-back corrections which have formed a slightly-irregular “W” or high-level double-bottom pattern.

With this marijuana stock now consolidating quietly in a small three-week long handle pattern wedged in-between the 50% and 62% retracement levels, it’s time to consider going long ACB stock.

My recommendation is to buy shares above $9.48 as ACB stock takes out the high of the formation’s weekly doji from two weeks ago.

I expect an upside resolution out of the handle will lead to a quick challenge of last fall’s all-time-high of $12.53. But to avoid any potential, “what was I smoking” situations, using a stop loss beneath the doji low makes good sense from both a money management and technical perspective.

Stock to Buy #2: SMG Stock

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Scotts Miracle-Gro (NYSE:SMG) is an old-school, household name best known for its lawn and gardening products. But in today’s budding grass market, Scotts is also the industry’s largest hydroponics supplier and my second buy recommendation.

Scotts was actually given the green thumbs-up of approval by this strategist about three weeks ago. The cannabis stock’s pick-and-shovels position for capitalizing on industry growth, fundamentals that don’t require smoking any product to appreciate their value, as well as a nicely-positioned SMG stock chart were ‘nearly too much to resist.’