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Investing in Weed and 5 U.S. States Angling to Pass Marijuana Legislation: Insights from Ganja Guru Serge Chistov

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The marijuana industry is quickly shaping up to be one of the most lucrative investment opportunities of the modern era. The performance of the North American Marijuana Index certainly demonstrates the growth and widespread adoption of cannabis-linked investments.

While the path to full legalization appears to be set in Canada, the picture south of the border is much more muddied. Several U.S. states, including California, have legalized recreational weed. Many others are pondering the question. However, they also realize that legalization at the state level runs contrary to federal DEA laws. This friction will make it difficult for marijuana industry to unlock financing or enjoy many of the same benefits as mainstream business.

Hacked recently had the opportunity to connect with Serge Chistov, the so-called ‘Ganja Guru’ and financial partner to the Honest Marijuana Company. The author knew many ‘Ganja Gurus’ growing up, but their skill was rolling a blunt. Chistov, on the other hand, has some unique insights about the trajectory of the market.

Upon reading our latest cannabis piece, Chistov chimed in on where he thought the market was headed.

Five States Angling to Put Recreational Weed on the Ballot in 2018

Chistov says there are no less than five U.S. states itching to put recreational cannabis on the ballot during the mid-term elections.

“The dominoes continue to teeter and fall. Arizona, Florida, Michigan, Missouri and Nebraska all have marijuana legislation up for vote in 2018,” Chistov said. “That would bring the total number of states with legalized marijuana, in one form or another, to 34 if the people in these five states vote yes (which they likely will).”

As a reminder, America’s marijuana landscape currently looks something like this:

Adds Chistov: “We are quickly approaching a time when all 50 states will have legal marijuana laws on the books. And yet the federal government is still stuck in a time when marijuana was considered to be the scourge of our nation’s youth—which it wasn’t, and isn’t.”

Cannabis Industry Up 150% Year-Over-Year

The cannabis industry has seen truly profound growth in a short period of time. Investment in tthe sector has grown 150% year-over-year to reach $1.8 billion. This figure is likely to grow manifold as legalization continues.

Chistov: “In the next 10 years, we may even see a cannabusiness go public. The potential for profit in this ever-expanding market is high right now and will continue to stay that way as legalization continues to spread.”

No Insurance

For all the opportunity afforded by cannabis growth, significant barriers remain. In Chistov’s view, the insurance industry is one of the biggest inhibitors marijuana businesses currently face.

Dozens of cannabis farms burned down in the recent California wildfires. None of the them were insured because federal law prohibits banks and financial institutions from participating in the marijuana sector. What’s more, many local farms used their savings to satisfy state permits, which typically run as much as $50,000.

“The destruction wrought by the California wildfires has brought this prejudice into stark focus,” Chistov said.

By operating outside the mainstream financial industry, pot growers will continue to face risks financing their business and insuring it against natural disasters.

 

The cannabis sector is a highly diverse ecosystem that consists of nearly a dozen major industries. Although the tide of legalization is quickly sweeping the continent, the path forward is expected to be rocky as the battle between federal and state jurisdictions continues.

 

Disclaimer: Author has no active investments in the marijuana industry. 

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 647 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Stocks Surge on Earnings as Saudi Tensions Ease

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US stocks started the session in positive territory following the positive earnings surprises by Goldman Sachs (GS) and Morgan Stanley (MS), and from then on, the floodgates opened and we saw the strongest rally on Wall Street since March. President Trump’s more diplomatic stance towards Saudi Arabia helped the bounce in stocks, together with the stability in Treasury yields, but the most important driver was the huge bearish move of last week in stocks.

The major indices all gained more than 2% amid the furious oversold bounce, with, unsurprisingly, the Nasdaq gaining the most on the day, but last week’s deep correction is still far from being erased, and given the negative market internals, we remain defensive towards equities, even regarding the short-term time-frame.

S&P 500 Index Futures, 4-Hour Chart Analysis

We were expecting a similar move since Thursday when stocks reached deeply oversold short-term momentum readings, and as we noted then, these rallies should be treated as selling opportunities, due to the broad technical weakness in emerging markets, Europe, and now on Wall Street as well.

The S&P 500 all but cleared the oversold short-term readings thanks to today’s surge and the preceding choppy consolidation phase, and now the index is near the levels where we would look for a swing high in the coming week. The Volatility Index (VIX) plunged back below, and its behavior in the coming days will be key in judging the real strength behind today’s move.

Russell 2000, 4-Hour Chart Analysis

In spite of the strong move in small-caps as well, the Russell 2000 continues to look wounded from a technical perspective, and the index is facing very strong resistance levels. According to almost all breadth measures, under-the-hood, things are also ugly, and even if the US bull market has legs, this correction is very unlikely to end with a V-shaped bottom, as a lot of healing would be needed to maintain a sustained rally.

Calm US Session in Currencies Amid Stock Surge

USD/JPY, 4-Hour Chart Analysis

Forex markets also saw corrective price action, although the main safe-haven assets, the Japanese Yen and gold gave back only a small portion of their recent gains. The Dollar finished little changed before tomorrow’s key FOMC meeting minutes, while the Pound pulled back after a positive European session.

We expect a larger move in the Greenback in the coming days, and the consolidation in Treasuries could also come to an end, and another leg higher in Yields could be the trigger that ends the oversold bounce in stocks.

Copper Futures, 4-Hour Chart Analysis

Commodities had a quiet and choppy session, except the still active gold, and although crude oil managed to bounce amid the risk-on shift, copper failed to build on its recent resilience. the industrial metal is still stuck in a bearish consolidation pattern, with all eyes on the $2.75 support and the $2.87 resistance.

The way Chinese assets will react to today’s rally will be crucial for the commodity, as a meaningful bounce could help copper to a new swing high, despite the bearish long-term pressures.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 377 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Market Update: U.S. Stocks Rebound Sharply as Earnings Season Underway; Cryptos Stabilize After Wild Monday

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U.S. stocks rebounded sharply on Tuesday, with the Dow adding more than 500 points as traders set their sights on corporate earnings. Meanwhile, cryptocurrecy prices hovered in a narrow range as trade volumes returned to normal.

Stocks in Recovery Mode

All of Wall Street’s major bourses posted large gains on Tuesday, with the large-cap S&P 500 Index advancing 2.2% to 2,810.05. All 11 primary sectors contributed to the gains, with shares of information technology and the closely related communication services companies leading the rally.

A strong performance in technology sent the Nasdaq Composite Index surging. The tech-laden average jumped 2.9% to close at 7,645.49.

Meanwhile, the Dow Jones Industrial Average rose 547.87 points, or 2.2%, to 25,798.87.

The CBOE Volatility Index, commonly known as the VIX, plunged 17.3% to 17.62 on a scale of 1-100 where 20 normally represents the long-term average. The so-called fear gauge spiked to six-month highs last week during the height of the stock-market selloff.

Corporate Earnings in the Spotlight

Wall Street is gearing up for another high-flying earnings season, with analysts at FactSet forecasting one of the best quarters since 2011. A trio of bank earnings last Friday kicked off the earnings quarter, with Citigroup Inc. (CI), Wells Fargo & Co (WFC) and JPMorgan Chase & Co (JPM) all reporting sound numbers.

Shares of Goldman Sachs Group Inc. (GS) rose sharply on Tuesday after the Wall Street mega bank reported better than expected per-share earnings. Morgan Stanley (MS) saw its share price rally after posting a 20% jump in profits on the quarter as revenues also increased. UnitedHealth Group Inc. (UNH), a Dow blue-chip, also posted firm gains after reporting top- and bottom-line results that were higher than expected.

Johnson & Johnson (JNJ), another Dow company, also reported better than expected earnings and revenue for the most recent quarter.

Cryptos Hold Steady

Bitcoin and the wider cryptocurrency market traded within a narrow range on Tuesday, as turnover fell more than 40% from the previous day’s high. In the process, Tether’s USDT stablecoin rose modestly after losing its one-for-one peg with the U.S. dollar.

Since peaking above $221 billion at the start of the week, the cryptocurrency market capitalization has stabilized around the $210-$212 billion range. Bitcoin, the largest crypto by market cap, traded steady at $6,575. The bitcoin price continues to trade at a significant premium on Bitfinex and other digital currency exchanges that facilitate trading of USDT.

As Hacked reported earlier, Tether took $300 million worth of USDT tokens out of circulation last week. One of the transactions, worth $100 million, was carried out on Oct. 9 with the remainder being moved five days later.

USDT plunged by as much as 6% on Monday, which triggered a sharp rise in the value of bitcoin and commensurate gains in the broader market.

The combined value of all cryptocurrencies currently hovers just above $211 billion, according to CoinMarketCap. Daily trade volumes amounted to roughly $12.2 billion.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 647 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market Analysis And Chartbook: Stocks Finally Find Footing as Pound Pushes Higher

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Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,768 0.80%
DAX 30 11,710 0.83%
WTI Crude Oil 71.33 -0.54%
GOLD 1,234 0.30%
Bitcoin 6,441 0.04%
EUR/USD 1.1600 0.18%

Although most of the key global stock benchmarks are still very close to last week’s lows, with some markets even hitting new lows this week, today equities might be in for something more than a dead-cat-bounce. The oversold short-term indicators have been screaming for a relief rally and those conditions still persist, even as the trend in most risk assets is clearly negative.

The US-Saudi tensions look to be slightly easing, with the local stock market staging a strong rebound following yesterday’s plunge, and as Treasury yields are still stable, there is no immediate negative catalyst to drive prices lower.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The Chinese stock market continues to be in very bad technical shape from a long-term perspective, as trade tensions and the slowdown in the economy are taking their toll. The Shanghai Composite resumed its bear market after the Golden Week, and it continues to hit new 4-year lows, still underperforming its global peers.

FTSE 100 Index CFD, 4-Hour Chart Analysis

European markets are also higher, but the bounce hasn’t even retested the breakdown levels, let alone questioning the downtrend. The FTSE 100 has been relatively weak lately, due to the Pound’s strength, and today it’s among the weaker benchmarks as well, after the releases of the British Employment Report which showed higher than expected wage growth.

Dow 30 Futures, 4-Hour Chart Analysis

The ongoing choppy correction in the US markets still hasn’t retraced more than the initial bounce, and given the still gloomy sentiment, there is plenty of room for correcting without violating the newly established short-term downtrend.

Earnings have been beating the consensus estimates so far across the board, and although expectations have been revised much in recent weeks, the results can still provide some momentum for stocks. Small caps outperformed yesterday, but that relative strength was short-lived, and today, the sector which has been leading the market lower is lagging again, which also confirms the deeper risk-off shift of the recent weeks.

Forex Markets Volatile as Brexit Talks, Dollar in Focus

EUR/GBP, 4-Hour Chart Analysis

The Great British Pound is having a huge day thanks to the wage growth beat and the hopes regarding a breakthrough with regards to the Irish border issues on the Brexit talks. The currency erased much of its recent pullback against the Euro and the Dollar.

The Pound hit multi-month highs compared to its largest peer earlier this month, and it could be starting another leg higher, at least against the weaker Euro, depending on the progress in the negotiations. The Dollar, on the other hand, lost ground once again today, at least in early trading, with only the overbought Yen dipping lower thanks to the improving global sentiment.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 377 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

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