Never a dull moment for PotStocks. Let’s look at CGC. (October 17, 2019)
This is Scott at Scott Trades on Twitter with stockmarketmentor.com and your Free Chart of the Day. I want to take a look at Canopy Growth ( NYSE: CGC ). Now, Canopy Growth ( NYSE: CGC ) has been in a significant downtrend for quite some time, since May, it’s been a hard trade unless you are trading the short side.
The reason that I want to look at it today is that today if I zoom in here, we just squeaked above this daily 8 exponential period moving average and did it on higher than average volume. Last night there was news about Cronos Group ( NASDAQ: CRON ); Cronos Group ( NASDAQ: CRON ) having a big gap up this morning and then a flush to the downside. Look at this selling volume, just yikes. But Canopy Growth ( NYSE: CGC ) closed green on the day, a lot of pot stocks actually closed pretty green on the day. It could be that, perhaps, as Canada’s cannabis legalization 2.0 kicks into gear that potentially we have some short covering in the space.
Now, obviously when you are in a chart that is in a significant downtrend there’s a lot of bag holders in this chart, there’s a lot of pain in this chart. If you think about it everybody that bought in this red box is losing money right now. Everybody that bought in this box is underwater and so there are not many winners in this stock. When it comes to trades like this I like to do just short-term swing trades so that is kind of what I am looking at here for Canopy Growth ( NYSE: CGC ).
The last time we closed above the daily 8 exponential period moving average and did it on higher than average volume we got a little bit of swing to the upside. So that is kind of what I am looking at here for Canopy Growth ( NYSE: CGC ). If I break it down to a 30-minute chart you can see it is kind of putting in higher lows on a short-term time frame here. We are getting these nice big bursts of volume at the beginning of the day and today at the end of the day.
Now you can say, “Well, what about extended hours?” Yes, if I turn on extended hours gross. But I still think that there could be a little bit of short covering on this stock. So what I am looking for here on Canopy Growth ( NYSE: CGC ) is just a break above $21.00. I think if we get a break above $21.00 and it comes on decent volume we could see a nice little swing up to here around 22.50. And if it continues that could give us a target of around $25.00.
So those are two targets for a possible swing trade for Canopy Growth ( NYSE: CGC ) that I see right now. And again, we are looking for the stock to really break above today’s intraday high and do it on higher than average volume. And we need that volume to soak up all of the supply that is, obviously, in this chart based on the amount of pain and the amount of downside that the stock has been showing the last couple of months here.
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