Analysis originally distributed on Feburary 15, 2017 By: Michael Vodicka of Cannabis Stock Trades
I was a derivatives trader for a billion-dollar trading firm at the Chicago Board of Trade for three years in my late twenties.
It was a crazy job. My job was to make huge bets all day long in highly volatile markets.
The key to this position was the chart.
I would hunt for specific formations on the chart, looking for stocks, bonds, commodities, or currencies ready to breakout into a new high or breakdown into a new low.
Once I found the right setup I would slap on million-dollar trades looking to “scalp” the market for a quick profit.
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This is the insanity of short-term trading and why I am now an investment advisor. You have to be nuts to gamble like that all day. Investing is a thousand times easier than trading.
However, as an investment advisor and financial writer, my background in trading is a weapon.
It helps me see things in the market that a lot of other advisors and investors miss.
Right now, my background in trading and charts tells me cannabis stocks are about to breakout into a new all-time high.
The North American cannabis sector has moved into a bullish formation on the chart that frequently leads to an upside breakout.
When I was a trader, this is exactly the kind of setup that would have gotten me excited about a fat winner.
The MJIC North American Cannabis Stock Index Is In Breakout Formation
The MJIC North American Cannabis Stock Index has moved into a pennant formation on the chart.
This is a setup that frequently leads to a strong upside breakout.
Here’s how Investopedia defines a pennant.
“A pennant is a continuation pattern in technical analysis formed when there is a large movement in a stock, the flagpole, followed by a consolidation period with converging trendlines, the pennant, followed by a breakout movement in the same direction as the initial large movement, the second half of the flagpole.”
Take a look at the pennant formation in the MJIC North American Cannabis Stock Index below.
Chart courtesy of MarijuanaIndex.com
This chart formation is important for two reasons.
First, I believe the entire North American cannabis sector is about to breakout and hit a new 52-week high.
As you can see, it looks like the index is being squeezed and ready to pop. I think that’s exactly what’s going to happen. That means it could be a good time to buy or add cannabis shares before the sector pushes another leg higher.
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Second, if the entire cannabis sector advances, I am expecting a smaller group of individual cannabis stocks to do even better.
For example, companies with strong revenue growth on the income statement and a great setup on the chart. Here are three of the best.
Canopy Growth Corp. (TSX.TO:WEED)
Canopy growth Corp is the largest medical cannabis company in Canada. Canopy is already making moves to dominate the global cannabis industry. It recently launched a joint venture in Brazil and purchased a German dispensary for $7 million. On the chart below, you can see Canopy is also in a pennant formation. I am looking for Canopy to break the 52-week high in the next few months.
Chart courtesy of StockCharts.com
Aurora Cannabis (TSX.V:ACBFF)
Aurora Cannabis is also one of the largest medical cannabis companies in Canada. Aurora is unique because it operates a legal monopoly. It is currently the only company with a license to produce and sell medical cannabis in Alberta, one of Canada’s largest provinces with a population of more than four million. On the chart below, you can see Aurora is also showing the pennant formation.
Chart courtesy of StockCharts.com
GW Pharmaceuticals (NASDAQ:GWPH)
GW Pharmaceuticals is a U.K. based pharmaceutical company. GW is in hot pursuit of the first ever cannabis blockbuster with Epidiolex, a drug designed to treat epilepsy. Epidiolex is currently in Phase 3 FDA testing, the final stage before receiving final approval or denial from the FDA. GW is expecting a final ruling on Epidiolex by the end of the year. On the chart, GW is in breakout formation. I am expecting a new 52-week high.
Chart courtesy of StockCharts.com
Action To Take
The entire cannabis stock sector looks like it’s about to breakout higher into a new 52-week high. If that happens, I am expecting these companies to lead the charge higher.
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look at mjna
Please let me know where is Adam Hewison??? Is he no longer with ino??? thanks, Popo H.