Technical Analysis 24.11.2018
Cannabis stocks have proven to be a highly promising investment and trading vehicle during 2018. With stock prices that increased by up to four-digit percentages and the improvements of medical and recreational cannabis legislation around the globe, the legal marijuana industry can be considered as one of the most promising in the world. In this weekly technical analysis series, Strain Insider aims to provide an outlook on five of the most relevant cannabis stocks.
This week’s piece features Aurora Cannabis Inc (TO:ACB)., GW Pharmaceuticals PLC (OTC:GWPRF)., Tilray Inc (NASDAQ:TLRY)., Cronos Group Inc (NASDAQ:CRON)., and Canopy Growth Corp (TO:WEED).
The summer dried up most of the stocks on the S&P 500 index. Marijuana plants are known to flourish during the late Summer months. But did the Cannabis stocks have a blossom too?
GW Pharmaceuticals (NASDAQ: GWPH)
Although GW Pharmaceuticals might not be considered as a cannabis stock by some, due to the fact that the company is actually a biopharmaceutical company, it still works intensively with cannabis ingredients and is therefore included in this analysis. With the growing acceptance of medical marijuana, GWPH seems to have set its focus right, which makes it a potentially attractive stock to watch.
While most stocks started declining in August and continued that downtrend, GWPH rose by 43 percent and reached its all-time high on September 27 at almost exactly $179.5. However, it declined by roughly 34 percent since then. It recently broke its support at $128.7 and continued the downtrend. That being said, the trendline acts as a major support and if it holds, the uptrend is still intact. With the Relative Strength Index (RSI) sitting at 37 points and the volume picking up, it seems like GWPH will continue to decline for another five percent until it reaches the trendline support.
Tilray (NASDAQ: TLRY)
Canadian cannabis producer Tilray increased by almost 1400 percent since its opening to the market on the 19th of July. From its peak at $299.95, it started declining and fell by 61 percent to this date. Because it is currently sitting at $116, Tilray needs to break $118.35 for a potential further uptrend, in which case the golden ratio also acts as a resistance. If it breaks through, the next step will be a test of the resistance between $135 and $142, which is 15 percent higher than the golden ratio’s position. If the price gets rejected by the resistance at $118, it may find its next support between $99.66 and $95. The RSI indicates bullish momentum with increasing strength, which makes a potential break of the resistance more likely.
Cronos Group (NASDAQ: CRON)
With an incredible increase of about 9000 percent since its start on the stock market in mid-July 2016, Cronos Group had incredible two years so far. The trendline acts as a major support and if it holds, the uptrend is still intact. The price is currently engaging with a strong resistance between $8.86 and $10. If it breaks, the price could climb to its most recent high at $12.94 and if it doesn’t, the trendline will act as a strong support. Apart from that, the volume picked up tremendously between August 21 and September 21, which led to a price surge of more than 143 percent. The notable increase in volume during an active uptrend is a very bullish sign.
Canopy Growth Corporation (NASDAQ: CGC)
Back in May, Canopy Growth became the first marijuana pure-play to be listed on the New York Stock Exchange. CGC surged by almost 3100 percent in the last 35 months. Being currently evaluated at $33.56, it faces a resistance at $36.12, where the price has been rejected two times this year. While the trendline is acting as an additional support, the next support zone underneath is between $24.50 and $26.50. The volume picked up heavily since the 14th of August, which is a very bullish sign. However, the RSI is losing steam and is performing a series of lower highs, while the price is reaching higher highs. Having said that, this bearish divergence is a strong sell signal.
Aurora Cannabis (NYSE: ABC)
Aurora Cannabis Inc. is a Canadian licensed cannabis producer and the second largest cannabis company by market cap. Aurora is currently valued at 29.28 percent under its opening price in 2018. Since its all-time high on October 16, it formed a bearish double top pattern while the RSI was and is showing a bearish divergence, resulting in a price drop of 51.51 percent. The next support is found between $5.15 and $5.5 and if should get broken through, the 100-day moving average will act as an additional support. Due to the strong increase in volume, it seems likely that it may decline further to the next support area. If it holds, the next resistance to break lies between $7.3 and $8.2.
2018 was a roller coaster for the stock market which has seen both all-time highs and heavy drops. In fact, the Dow Jones opened 1.83 percent higher than its current valuation and declined ten percent from its peak on the October 3 this year. Nasdaq opened 14.45 percent under its current price, dropped more than 18.40 percent from its peak of $96.76, that was between September 4 and October 11, and finally recovered and rose by 11 percent to reach its current value of $87.86. Facebook (NASDAQ:FB) also dropped by almost 42 percent since its all-time high in late July and even Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) declined by up to 30 percent in the last two months.
Moreover, at the time of writing and according to the global market capitalization on Coinmarketcap, the cryptocurrency market tanked by more than 80 percent since its peak on January 7, 2018. With Bitcoin remaining at $3700 and stocks eyeing a potential long-term bear cycle, cannabis stocks outperformed both markets by far.