The cannabis sector is showing signs of stabilization following a harsh post-election sell-off triggered by election results.

With Donald Trump’s return to the presidency, a GOP-controlled Senate, and Florida’s rejection of Amendment 3, which would have legalized cannabis, investor sentiment turned cautious, leading to widespread panic selling.

Yet, as of Thursday, some stocks are making a modest comeback, suggesting that Wednesday’s declines may have been oversold.

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Tilray Brands TLRY: A Tentative Recovery

Tilray experienced a sharp drop yesterday, trading down to $1.51 amid panic selling, but has recovered slightly to $1.56, marking a 1.3% gain.

The RSI stands near 41.85, indicating that the stock is approaching oversold.

This could attract buyers, but the stock’s movement remains tentative, with resistance around $1.60, and a figure turning into a hammer, which could indicate final dip levels.

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SNDL SNDL: Holding Support

SNDL is showing resilience at the $2.00 support level, recovering slightly to $2.02 with a neutral RSI at 45.90. The stock has managed to absorb some of the selling pressure, though it remains below its recent high near $2.60. This indicates that traders may be taking a wait-and-see approach for clearer signs of sustained support before fully stepping back in.

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Trulieve TCNNF: Strong Bounce

Trulieve, which suffered a drastic drop yesterday following Florida’s failed cannabis legalization effort, is now up 6.53%, trading at $7.67. The RSI of 28.54 highlighted an oversold condition, drawing in buyers looking for value. This recovery suggests the initial selling may have been excessive.

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AdvisorShares Pure US Cannabis ETF MSOS: ETF Stability May

MSOS, a popular cannabis ETF, has risen by 4.83% to $5.21, rebounding from an RSI of 31.15, which flagged oversold conditions. With many cannabis stocks attempting recoveries, MSOS is holding above the $5.00 level, a critical support.

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Read Also: EXCLUSIVE: Tax Changes Could Unlock ‘Hundreds Of Millions In Cash Flow’ For Cannabis Sector, Experts Predict

Is Buying The Dip A Good Idea?

While the sector is showing early signs of stabilization, the underlying risks remain. Still, most stocks look heavily oversold or reaching that point.

Fundaments are relevant to understand what the outcome might look like in the mid-turn.

With a GOP-majority Senate likely to stall cannabis reform, there’s a possibility of four more years of cannabis protectionism – a period marked by minimal legislative progress and regulatory insularity.

Nevertheless, an argument could be made that the fundamentals of cannabis have not changed and, particularly, that the impact of rescheduling on balance sheets, due to the suppression of 280E burden, would be formidable for the industry. Rescheduling does not require a Senate majority or presidential involvement.

That said, stock prices for cannabis rely heavily on the upcoming DEA administrative hearing and ruling.

Investors should weigh the potential for long-term industry growth against the immediate political headwinds.

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Disclosure: this article is not intended to provide financial advice. Consult a professional before making investment decisions.