Market Overview

This Is The One Cannabis Stock NOT In A Downtrend Right Now

This Is The One Cannabis Stock NOT In A Downtrend Right Now

October 17 was one of the biggest days in the history of cannabis, as Canada became the largest country in the world to federally legalize the substance. 

But it’s been all downside for cannabis stocks since then. Nearly every publicly traded cannabis company is in a clear downtrend at the moment, as the major market indices have given back their 2018 gains. As Lane Mendelsohn, president of VantagePoint ai pointed out, this correlation isn’t exactly a surprise. 

“The cannabis sector is not just driven by what’s happening within that sector, but it’s actually being driven by technology, healthcare, pharmaceutical, even agricultural companies and industries,” he said. “You really have to look at the global picture and consider not just what’s happening domestically because this whole sector is global.”

However, there is one cannabis stock that has held up over the last two weeks, according to VantagePoint. VantagePoint’s artificial intelligence and intermarket analysis signals make 1-3 day forecasts accurate up to 86 percent of the time. Using those predictive indicators, we can find the one that’s outperformed the rest of the sector in October. 

That stock is CV Sciences Inc (OTC: CVSI), a Las Vegas-based CBD producer. The stock started 2018 at $0.65 and eventually rose to $9.20 on August 20. 

The chart below is a three-month chart of CVSI, where each candle represents one day of trading. Though the stock has traded down 21 percent since the 16th—a not insignificant amount—it has mostly held above the $5 level. Though a lot of the momentum from August and September has obviously abated, it closed Tuesday’s session at $4.99—still a long way away up on the year. 

Image courtesy of Vantagepoint ai

That chart can be interpreted in two main ways. First, the fact that the blue line and black line are essentially in-line with each other tells us that this stock is range-bound at the moment and not in a particular up or downtrend. We know this because the blue line is a three-day predicted moving average, and the black is a simple 10-day moving average. 

When the two lines diverge, that indicates a strong trend. The recent convergence indicates that we can expect CVSI to continue trading in the $4-6 trading range it’s been in for the last six weeks. 

The other way to interpret this is by looking at the red-green bar at the bottom of the chart. That’s a neural index, which predicts whether a stock will move higher or lower in the coming two days. Note the recent shift to green—that tells us that we can at least expect some positive price action in the stock over the near-term. 

To be clear, both this stock has still been weak recently. But the fact that it’s held up well during what has been a massive period of contraction in cannabis stocks is a good sign for CVSI investors. We’ll have to see if that continues to be the case. 

Vantagepoint ai is a content partner of Benzinga. For a free demo click here.


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