Just micro-dosed a few minutes ago to stay on theme for this 2022 technical outlook. Psychedelics. 2021 was the year I was introduced to the benefits of psychedelics. Mind you, I am not taking major trips. After much persuasion, this year I began micro-dosing. One pill a day, and then two days off, and then one again. Let me just say psychedelics are something you have to try in order to believe it. Micro-dosing really proved to me the benefits shrooms have for mental health and other issues. This stuff legit makes you happy and joyful, without getting addicted. For me, it was more about being more focused and creative while feeling positive. I don’t suffer from things like depression and such, but I have spoken to people who are. They cite micro-dosing as the thing which pulled them out from dark places. Even saving their lives.

I might be a bit biased when it comes to shrooms. As some of you know, I am a history buff. I love my ancient/classical history. There have been a few books regarding psychedelics and ancient cultures. A lot of it has to do with Gnosticism. “The Sacred Mushroom and the Cross” was a book that came out in the 70’s. Still a read today. A recent book popularized by a Joe Rogan Podcast is Brian Muraresku’s “The Immortality Key: The Secret History of the Religion with No Name”. Some may dismiss this as conspiratorial, but both books are based on empirical evidence. Read them, and I am sure you will be more inclined to give shrooms a try.

When it comes to shrooms, Canada is really where it is at. I mean I can order them online and get them delivered to my front door in less than two days. My American friends have to take other steps, but can’t believe how accessible shrooms are for us Canadians. The US has to deal with Cannabis first.

If you have listened to any of our Investor’s Roundtables, you know here at Equity Guru, a lot of us are bullish psychedelics. Heck, Chris Parry spoke about psychedelics at the Vancouver Resource Investment Conference 2020, a mining conference. You can’t get more bullish than that. However, the government, more specifically government inaction and pressure from lobby groups, could still be an obstacle for psychedelics.

I am bullish on psychedelics long term because I really think it could be a game changer for mental health and other conditions. I am seeing more people in my generation favor shrooms over cannabis. I mean firstly you don’t get that smell, but mainly it is because there is an emphasis on the experience with shrooms. There is almost this sacred forbidden secret vibe attached to psychedelics. Plenty of people are taking them to be more productive. The big thing right now is taking a large micro-dose (two pills say around 600mcg) and then going for a walk in nature. For those investing in cannabis, there is a real threat that shroom stocks pose a challenge. If I had the choice to invest in either sector, it would probably be psychedelics for the long term.

In terms of charts to watch, I am going to keep it very simple today. Yes, there are individual companies like MindMed which are attracting big money, but why not just own the sector? Plus a lot of the psychedelic stocks look beat up.

Let’s start with AdivisorShares Psychedelics ETF (PSIL) which invests in the emerging psychedelic drugs sector, offering exposure to those biotechnology, pharmaceutical and life sciences companies we see as leading the way in this nascent industry. Ongoing and growing research has shown various psychedelic substances offering promising medical and therapeutic potential for treating mental health issues and neurological disorders. PSIL concentrates its portfolio on companies deriving the majority of their net revenue or devoting the majority of their assets to psychedelic drugs.

Here are the holdings:

Chart wise we have a potential basing pattern being set up. PSIL is retesting previous all time record lows. We aren’t out of the woodwork just yet, but the potential of a reversal pattern is here. Perhaps a double bottom pattern early in 2022 but two key criteria must be met. I would like to see a close above my moving average. But more importantly, I want to see the resistance at $6.60 be taken out. That triggers the breakout and the pattern. If this does not occur, the possibility of PSIL drifting lower and forming new lower lows and record lows is still there.

Don’t worry Canadians, I have you covered. The world’s first psychedelics ETF, Horizons PSYK ETF is the choice for us. The ETF seeks to replicate, to the extent possible and net of expenses, the performance of a market index that is designed to provide exposure to the performance of a basket of North American publicly-listed life sciences companies having significant business activities in, or significant exposure to, the psychedelics industry. Currently, the ETF seeks to replicate the performance of the North American Psychedelics Index, net of expenses.

Here are its holdings:

Technical wise, similar approach to PSIL. We have a double bottom and a reversal play could be in the cards. The last time I spoke about PSYK, I was watching support at $6.50. Unfortunately it did not hold. This is why it is best to wait for the pattern trigger, or breakout, rather than just buying support when the price is in a downtrend. Buying at support on a breakout and retest is a different story.

Technically, psychedelic stocks are looking like cannabis. Clapped and in downtrends. But as we know, nothing moves down or up forever. Assets move in waves. Market structure and cycles as I call them. I still expect stock markets to continue higher as long as cheap money remains in place. Money is chasing yield, and the stock market is the best place to do it. Some of these beat up sectors will look cheap compared to everything else. This could see money flowing into smaller cap stocks and sectors. As always, watch the Russell 2000 for that breakout. It will be beneficial for both cannabis and psychedelics.