{"id":195733,"date":"2023-09-01T02:40:29","date_gmt":"2023-09-01T06:40:29","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=195733"},"modified":"2024-01-24T12:12:38","modified_gmt":"2024-01-24T17:12:38","slug":"chart-advisor-pot-stocks-burn-shorts","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-pot-stocks-burn-shorts\/","title":{"rendered":"Chart Advisor: Pot Stocks Burn Shorts"},"content":{"rendered":"\n<p>By&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=7a6c846ae0e748d386a7a450c7502553&amp;_e=C4mdObQnNjrqi-AadH-Tv6DM4HRHaOBSeUlijNCQNHQx0UQ1NXp7Ei12CrsoRx5qIYYQYh4fSLXgA8JbMgtKuYLewK3z54IJ9cT0kTPw8zWYqGU2bZUjJzfmimQdvNWzasEMgnUOGMF5uiGj1v06qpHJpO9rECi28gHvOIvArix14FtXYGopC9lVD-tGpoahyLN7NVkCA0EyLKhMlRWx-YsKzbNeN9k7h6ZoxjvvJVT4nYDvSKFzByY5cTU3yWUeUOpXLD3UYEKKurAttMqBuKqyR-ESgSoz3x2eqhJhTI2pjFHPQbduGnm3Fm4-yVkw4TvO6vMjt8qmyP8GkHe0R8-Hj7Hw8_ohELw3tGTfvBA9AvEU4Q9n1pQZZLTotgVzb5ZfsnFST3VXgdEorj_VHLumruW8VsrrzsrWQDGYfRADpi91EL_aD_jFE7qLCVvYfyzT2VXFf1gu42D0hANCMw%3D%3D\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>J.C. Parets<\/strong><\/a>&nbsp;&amp;&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=7a6c846ae0e748d386a7a450c7502553&amp;_e=C4mdObQnNjrqi-AadH-TvzT55Q1dq4zvSneQIS_YM-9D4C3PkGGLHhU1n3t_zXL9p712AUeaVr6YOTZoWniSqkf5Z0KmtWq7TMlF26ro-NI0QMgMMg6POsMzvPD1qObRLe3Qzt4z46CxymHm5iUX0NMf5yZg-WPc2bPL00Ml_mKxzwpwaXoQadFW_rnISYHz9dN5EAq2dkVQFfkZKxmDeZIWUQU_7x-RsFGf6QnHByFXQjtQWfOqOC0uUkvARtf7fc21xZiF56C9kj4GepPyhSlJPo-88eyb53Q1SaCu71RhieOjRSufvG0D1R1MC8B6gpFtl5UjOdWk6-FmK5Fj9aZ6OH8-BzanQ2Wynl72wi8Q7cSeRGX_xiNN-_rTiiVzF2S3WlHqBN00Y-vJALjmBZORDLPUFSMiiWcrY-jTaaTwcaPABnH7Xto6a5vf05Yx\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>All Star Charts<\/strong><\/a><\/p>\n\n\n\n<p><strong>1\/ Pot Stocks Burn Shorts<\/strong><\/p>\n\n\n\n<p><strong>2\/ Big Tech vs. Everything Else<\/strong><\/p>\n\n\n\n<p><strong>3\/ Can Buyers Crack Supply?<\/strong><\/p>\n\n\n\n<p><strong>4\/ The 5-Year T-Note Lays Low<\/strong><\/p>\n\n\n\n<p><em>Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-pot-stocks-burn-shorts\">1\/ <strong>Pot Stocks Burn Shorts<\/strong><\/h2>\n\n\n\n<p>With two straight days of massive gains,&nbsp;<a href=\"https:\/\/www.investopedia.com\/cannabis-stocks-2023-ahead-7089718?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">cannabis stocks<\/a>&nbsp;are on pace to book one of their best weekly performances of all time. Pot stock bulls would tell you that the space was long overdue for a move higher, but the chart has been trending steadily lower for two and a half years now.<\/p>\n\n\n\n<p>As regulators contemplate rescheduling marijuana away from a substance that is deemed to have \u201cno medical use,\u201d investors are cheering the news in anticipation of heightened demand for the entire industry.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/1-1100x537.png\" alt=\"\" class=\"wp-image-195734 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/537;\" \/><\/figure>\n\n\n\n<p>We\u2019ve seen headlines drive prices higher for cannabis stocks many times over the past few years, but these news and events have never triggered any real follow-through. Today and yesterday already feel a little different, as we can point to technical developments on the chart that suggest this could be the start of a true trend reversal.<\/p>\n\n\n\n<p>The first characteristic of a potential trend reversal is the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/t\/trendline.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">trendline<\/a>&nbsp;break. You can\u2019t reverse course without it. Today, the ETFMG Alternative Harvest ETF (<a href=\"https:\/\/www.investopedia.com\/terms\/o\/overbought.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">MJ<\/a>) surged above its downtrend line from the 2021 highs. Momentum also triggered an&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/o\/overbought.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">overbought<\/a>&nbsp;reading for the first time since Q1 2021. This all speaks to a change in character for cannabis stocks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-big-tech-vs-everything-else\">2\/ <strong>Big Tech vs. Everything Else<\/strong><\/h2>\n\n\n\n<p>Tech and&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/g\/growthstock.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">growth stocks<\/a>&nbsp;are not only hitting overhead supply in absolute terms, but the relative trends also suggest that their recent outperformance might pause for a while.<\/p>\n\n\n\n<p>Below is the Nasdaq 100 (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=qqq&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">QQQ<\/a>) relative to the Russell 3000 (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=iwv&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">IWV<\/a>):<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"538\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/2-1100x538.png\" alt=\"\" class=\"wp-image-195735 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/2-1100x538.png 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/2-700x342.png 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/2-300x147.png 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/2-768x376.png 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/2.png 1198w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/538;\" \/><\/figure>\n\n\n\n<p>As you can see, this ratio is pressing against a shelf of former highs. Buyers are working on absorbing all the overhead supply at this critical&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/resistance.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">resistance level<\/a>. If and when they do, tech stocks will likely kick off the next leg higher on absolute terms, too.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-can-buyers-crack-supply\">3\/ <strong>Can Buyers Crack Supply?<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.investopedia.com\/terms\/c\/commodity.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">Commodities<\/a>&nbsp;are chipping away at overhead supply. And no chart captures the growing demand for raw materials quite like&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/crude-oil.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">crude oil<\/a>.&nbsp;<\/p>\n\n\n\n<p>Check out crude oil&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/f\/futurescontract.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">futures<\/a>&nbsp;forming a multi-month base below a critical resistance level:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/3-1100x561.png\" alt=\"\" class=\"wp-image-195736 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><\/figure>\n\n\n\n<p>Buyers have challenged this supply zone four times since last November, with a&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/f\/failedbreak.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">failed breakout<\/a>&nbsp;marking the most recent attempt.<\/p>\n\n\n\n<p>Interestingly, bullish momentum continues to improve following a recent overbought reading.<\/p>\n\n\n\n<p>We imagine that interest rates and inflation could be on the rise if and when buyers decisively crack crude oil\u2019s resistance. This would likely lead to more breakouts across the commodity space and renewed woes for&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/b\/bond.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">bonds<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-the-5-year-t-note-lays-low\">4\/ <strong>The 5-Year T-Note Lays Low<\/strong><\/h2>\n\n\n\n<p>Crude oil prices at $100?<\/p>\n\n\n\n<p>Perhaps. But falling bond prices would likely accompany a rally in black gold.<\/p>\n\n\n\n<p>Notice that 5-year&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/t\/treasurynote.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">Treasury note<\/a>&nbsp;futures construct a mirror image of the crude oil chart:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/09\/4-1100x561.png\" alt=\"\" class=\"wp-image-195737 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><\/figure>\n\n\n\n<p>Multiple attempts to absorb supply in crude coincided with multiple attempts to overwhelm demand in the 5-year T-note.<\/p>\n\n\n\n<p>Who\u2019s got it right?&nbsp;<\/p>\n\n\n\n<p>It\u2019s tough to say, but we doubt that these two markets will resolve in the same direction.<\/p>\n\n\n\n<p>U.S. Treasuries appear increasingly vulnerable\u2014regardless of the intermarket landscape. While the 14-day&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/rsi.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=10147401-20230901&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=090123\" target=\"_blank\" rel=\"noreferrer noopener\">relative strength index (RSI)<\/a>&nbsp;reached its highest level in almost six months, the 5-year can\u2019t seem to get off the mat.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally posted 31st August 2023<\/p>\n","protected":false},"excerpt":{"rendered":"<p>With two straight days of massive gains, cannabis stocks are on pace to book one of their best weekly performances of all time. Pot stock bulls would tell you that the space was long overdue for a move higher, but the chart has been trending steadily lower for two and a half years now.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,14,15,17,18,6,9,22,23,26,3],"tags":[6687,1468,2782,14277],"contributors-categories":[13686],"class_list":{"0":"post-195733","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-commodities","7":"category-etfs","8":"category-fixed-income","9":"category-futures","10":"category-macro","11":"category-north-america","12":"category-securities","13":"category-stocks","14":"category-technical-analysis","15":"category-text-articles","16":"category-traders-insight","17":"tag-iwv","18":"tag-mj","19":"tag-qqq","20":"tag-zf_f","21":"contributors-categories-investopedia"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Chart Advisor: Pot Stocks Burn Shorts | Traders&#039; Insight<\/title>\n<meta name=\"description\" content=\"With two straight days of massive gains, cannabis stocks are on pace to book one of their best weekly performances of all time. 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