- Legislation focused on cannabis legalization in the US and Germany excited investors.
- Tilray stock rallied 14.6% on Thursday.
- Sundial Growers shares advanced 6.1% on Thursday.
Rallies in the cannabis industry rarely have legs this year. This fact is being proven once again despite nothing different happening on Friday. Shares of both Tilray Brands (TLRY) and Sundial Growers (SNDL) rocketed higher on Thursday due to German Chancellor Olaf Scholz announcing support for recreational cannabis use in Germany by 2024, as well as the US Senate signaling intent to bring a legalization bill to the upper chamber next week.
Tilray is now down 9% at $3.35 on Friday. Sundial has sold down 1.7% and is trading at $0.3237. This is ironic because nothing has changed on the legalization front and all three major US indices are up close to 1%. On Thursday when TLRY and SNDL were rallying, the market was down broadly. This is one sub-sector that loves to buck a trend.
Tilray, Sundial Growers stock news
Tilray already owns a medical cannabis center in Neumunster, Germany, so it would likely be among the first to benefit from legalization. Germany is also the largest economy in the EU, so legalization there might spread to other nations more quickly. No one wants to be left out of a tax haul, especially a legislature ahead.
Separately, the Cannabis Administration & Opportunity Act might finally get a hearing next week in the US Senate. The bill, put together by Senators Ron Wyden, Chuck Schumer and Cory Booker, would remove marijuana from the list of drugs covered by the Controlled Substances Act. States would still be able to prohibit sales however.
The two separate legalization avenues an ocean apart led to most of the cannabis industry rallying strongly on Thursday. Sundial has invested heavily over the past two years in US-based cannabis companies, including an up-and-coming cannabis vape firm in California. Sundial gained 6.1% to $0.3290 on Thursday, and Tilray closed up an impressive 14.6% to $3.69.
Tilray, Sundial Growers stock forecast
Sundial stock faded from its range high near $0.3947 at the end of June and has mostly been collapsing since. That resistance level guards the May target of $0.4420. Bulls better hope that $0.29 holds, the most recent support. If it does not, then expect SNDL stock to trend down to between $0.20 and $0.25.
SNDL daily chart
Tilray stock failed to break through the $3.72 resistance level on Thursday. The price did briefly trade as high as $3.81, but then it closed the session at $3.69. This shows us that $3.72 is still in charge, and Friday's price action is sending TLRY stock back down away from $3.72 to pick up more steam. There is no real rally to speak of in TLRY until $3.72 is resoundlingly broken.
At this point, expect TLRY to sell back to $3 before finding enough buyers. One good sign for bulls is that the Accumulation/Distribution line has been grudgingly moving higher over the past month. In mid-June it sat at -1.56 billion. On Thursday it rose to -1.48 billion. This means some accumulation is happening at these price levels.
TLRY daily chart
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