Does this pullback make it high time for pot stocks? I wouldn’t go there. With Cronos (CRON), Tilray (TLRY) and Canopy Growth (CGC) all trading lower, money is going out, not coming in. (October 22, 2018)
CRON TLRY CGC
Let’s look at Cronos ( NASDAQ: CRON ) here. Pot stock, you know the drill here. I had the channel line drawn here but now I am going to move it down to about this level here. What I am looking for is a particular channel, where the stock is trading, that can provide some kind of a reliable rebound and this could be it. You could look at this now and say, “Oh my gosh, it’s down so much. It traded clear down from 13.00 to 8.50, that’s a 33 percent retracement; time to buy this stock.”
You may very well make money on it if you do that but I look at it as a really risky trade and I will tell you why. First of all, as the stocks move down everybody that sold, sold it to somebody who bought. So there is a LOT of resistance on this stock. Any kind of buying pressure is going to be sold into. Also, if you look at it from kind of a sector standpoint you can look at the other big three, which is Tilray ( NASDAQ: TLRY ) and then Canopy Growth ( NYSE: CGC ), which I will get to in just a second; these are also selling off.
The question is, why is that happening? I’m not a bear; I’m not a bull here, I’m just a trader so I don’t really care about the big story on all this stuff, it’s just not of interest to me; it’s just not. But I do understand that this stock here as well as Cronos ( NASDAQ: CRON ) and Canopy ( NYSE: CGC ), they were trading up on news that Canada was legalizing it and they were going to be able to ship products into the US legally and so everything kind of popped up on that. I don’t remember the exact date but I kind of think it was here. I really kind of think it was right here at what turned out to be the top. If we look at the Canopy Growth ( NYSE: CGC ) you see a similar situation here; where it really has had a pretty nasty fall here.
My suggestion to you is, if you are anything other than a day trader, seriously, don’t go anywhere near these stocks, they really look like they are imploding. If you are a day trader there is plenty of liquidity here for you, almost 26 million shares traded today. Above average volume but not THAT above average, so you can look for rebounds here. The main thing to do is keep in mind where is your likely support? I would say on this one, for example, $40.00. But you don’t just buy it here because there is support at $40.00. You have to wait and see the trade, let it come to you.
On these, right now, I think pressure is to the downside. I would be avoiding them. If you see one starting to move up, before you buy it look to the other two, Canopy ( NYSE: CGC ), Cronos ( NASDAQ: CRON ) and Tilray ( NASDAQ: TLRY ); they should all be moving in sync. If they are not moving in sync; no it doesn’t mean something is going on. No, it just means that the other stocks are not really participating and it is probably kind of a singular buyer coming in. That’s the kind of that is typically always wrong. Stick with the trend and right now the trend is not your friend on these.
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