What is CBD?
You might say that CBD is marijuana’s goody-two-shoes cousin.
Every year, several stocks will become extreme gainers, often within very short periods of time. Right now, identifying the next hot sector is as easy as A-B-C … or rather, CBD.
CBD is an emerging sector in the stock market with plenty of promising catalysts. Could CBD follow the incredible trajectory most recently enjoyed by marijuana stocks?
In this post, I’ll introduce you to CBD, what’s happening that could affect stock prices big time, and why this is a sector to look at for swing traders.
CBD: A Non-Psychoactive Marijuana Derivative
CBD is short for cannabidiol. While it’s derived from the marijuana plant, unlike the arguably more famous compound THC which is found in pot, CBD is non-psychoactive.
Where’s the fun in that? Well, this means that CBD is less about getting high and more about the medicinal benefits, which are said to include reducing chronic pain, anxiety, depression, reduction in cancer-related symptoms, and improved heart health, among many others.
With its impressive list of curative properties, CBD is appealing to individuals of all ages who want to take a more holistic approach to health and want the medicinal benefits of marijuana but without all the stoner cliches.
A Legal Grey Area
CBD isn’t illegal. However, to be sold legally, many suppliers have to jump through some big hurdles and plenty of red tape.
Small producers may not have the funds or ability to meet the stringent standards set by the government, so plenty of CBD is sold quasi-legally on retail shelves.
This might fly under the radar at mom and pop health food stores, but it means that you don’t see CBD on the shelves of big retailers like CVS or Rite-Aid.
Why Is CBD the Next Hot Sector?
Curious about what makes CBD so compelling right now? Here are some reasons why it could be the next big thing …
A Compelling Catalyst: The Farm Bill
While CBD has slowly but surely been gaining attention as a sort of wonder cure, the fact that it resides in a legal grey area has prevented it from being readily available to a wide market of consumers.
However, all of that could change very soon due to a little something called The Farm Bill.
The Farm Bill was established in the 1930s as part of the New Deal. Its original goals, which still ring true today, were to maintain fair food prices for farmers and consumers, to help make sure that food supplies remained sufficient, and to protect the country’s resources.
If approved, this year’s proposed Farm Bill would completely legalize industrial hemp, which is the most common source for CBD.
Once federally legal, this could increase CBD growing big time and make it available to a much bigger audience. This means that in the near future, your mom might be picking up a bottle of CBD capsules along with her cough medicine at CVS.
In terms of stock prices, this could have an immense impact, as the legalization might spur increased production, mergers and acquisitions, and completely change the landscape of the CBD business. In short, it could be like a CBD gold rush.
Historical Data
As a swing trader, you always want to gather evidence to help prove the case before making your trade.
But if this is like a gold rush, how can you, as a trader, avoid being an aimless prospector? After all, there’s not a ton of historical data to look at with most CBD companies.
However, you may be able to take some cues from the history of another recent hot sector: marijuana stocks.
History never repeats itself quite to the letter, but by looking at the trajectory of marijuana stock spikes in recent years, you can gain valuable information about how it might play out with CBD stocks in the future.
Potential Momentum for the Rest of the Year
Even though the Farm Bill hasn’t been passed yet, the buzz around it has already created some movement with CBD related stocks.
Given the insane growth that marijuana stocks experienced in the recent past and the size and scale of the Farm Bill catalyst, plenty of traders are looking at and trading CBD stocks already.
The bottom line? There’s potential momentum in this sector for the rest of the year and even into 2019.
CBD Stocks and Swing Trading
Now that you have an idea of why CBD related stocks might be the next movers and shakers, let’s talk about how they relate to swing trading.
What is Swing Trading?
Swing trading is a method of trading where you hold onto stocks long enough to profit from price changes or “swings” (which is also where the trading style gets its name).
Unlike day trading, where you’re holding a position for less than a day, swing trading positions can last anywhere from a couple of days to several weeks, and in some cases, even months.
Swing trading is a longer-term approach, and it tends to be appealing to traders who can’t or don’t want to be glued to their monitor watching every tick of the stock.
Why Swing Trade CBD Stocks?
CBD stocks are extremely enticing for swing traders for a few reasons.
Hot Sector: Cannabis stocks have proven to be very strong in the market, and CBD is a buzzy new related emerging sector.
Great Catalysts: CBD is receiving all sorts of attention as a wonder drug. It’s also poised for insane growth pending the forthcoming Farm Bill. These are strong catalysts that swing traders are looking at so they can be ahead of the trend!
Potential For Growth: Once fully legalized, you can expect expanded production and sales for CBD producers … as well as plenty of hot IPOs in this sector. This means that there’s a lot of growth potential for CBD that swing traders can use to their advantage.
Swing Trading with SwingTrades
Now that your curiosity about CBD has been piqued, how can you get in on the action as a swing trader? That’s easy: increase your knowledge base.
If you want to take the next steps toward educating yourself as a swing trader so that you can take advantage of hot sectors like CBD, consider becoming one of my protégés.
SwingTrades with Paul Scolardi
My real name is Paul Scolardi, but my trading track record — plus my signature Clark Kent style glasses — have earned me the nickname “The Superman of Stocks.”
Over the years, I’ve developed a method of seeking out stocks before they reach their peak. Using this method, I’m a self-made millionaire.*
I now share my strategy and have taught 1,400 students in over 50 countries. One of my students reports making over $1 million dollars in a year and half after learning my strategy.
If you are interested in learning how to choose stocks ahead of the curve, I recorded a free video where I share my one-word secret that can unlock these massive winners. Click below to watch this free video.
Have you traded CBD stocks? What has your experience been? Leave a comment and let me know!