Are you bullish on pot? Check out my analysis on Tilray (TLRY) (October 29, 2018)
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With Tilray ( NASDAQ: TLRY ) and with all of the pot stocks; here’s the thing: These are bubble stocks. We can just go through them: Canopy Growth ( NYSE: CGC ), you see this and I am sure there are a whole bunch of others. This isn’t my deal and it doesn’t have anything to do with THC or moral authority or any of that stuff. I really don’t understand the market and I am not sufficiently interested enough to learn; I would just rather learn the charts.
Here’s the thing. If you are holding Tilray ( NASDAQ: TLRY ), I think you have got to sell it. A while back I actually took a poll on Twitter; I asked people after this breakdown here, the stock was at like 150.00, and I said, “What do you think the next likely price is that Tilray ( NASDAQ: TLRY ) is going to hit, 300.00 or 50.00?” I was actually surprised, there were a fair number of folks that said it would hit 50.00, which, in my secret view, was the right answer but a lot of people said 300.00.
And so that kind of leads me to believe that there is still a little bit of bubble vision going on here where people still look at this and say, “Oh yes, but it’s pot and it’s legalized and this and that and Constellation Brands is getting into this.” Okay, that’s fine, but you have got to look at this price chart. From where the stock opened up, which was just in July, the stock ran up.
Here, you will find this kind of wild, the stock ran up over 1200 percent and so from the top now it’s down basically two thirds. So you have had like two third retracement here. But here’s the thing, even if the stock falls another 50 percent, we’ll say 45 percent, in other words, down to $50.00, look at where that price would be relative to where the stock opened up, it would have more than doubled.
So my point is when you are looking at stuff like this and thinking, oh no, it could never do that. I’m telling you it could and it has, it does and this probably will. Similarly, you look at Amazon ( NASDAQ: AMZN ) who would have thought that the stock could do this? A lot of people have thought that the stock would do this. And I will tell you something else; I think this could go even lower. The thing is, when a stock gets to a point where it has just fanboys everywhere, where everybody loves a stock, that’s a stock that you know that is so widely known and so widely owned that the path of least resistance is most likely going to be downward; to where we are seeing selling pressure into just about any kind of rally.
So I am not sure that you could short Tilray ( NASDAQ: TLRY ); I don’t think there are shares that are even available for shorting. You can sell calls on it, there are a few different option trades you can do but the options are not particularly liquid so that’s a real risky proposition. I will just say this, if you are in Tilray ( NASDAQ: TLRY ) you can always buy it back but you won’t always be able to sell it at 90.68 anymore than you will always be able to sell it where you could have this morning right at the 50-day moving average before it broke down.
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