- In financial markets, there are certain price levels that are more significant than others with regards to the amount of supply and demand that exists at them
- In financial markets, prices are always doing one of three things. They are either going up, going down, or staying the same. I use a process and methodology that has been developed over twenty years in order to identify these levels and price trends
- An understanding and awareness of these levels and trends will add Alpha to almost any investment strategy
- I do not utilize many of the traditional Technical Analysis Techniques such as Gann Theory or Elliot Waves and believe they belong in the realm of Bigfoot and UFOs…fun to talk about but hardly credible
- My philosophy and method is based on experience, common sense, and logic. I spent almost two decades trading illiquid securities and this background gave me the ability to understand how to identify these levels and trends
- Now that they have started to develop trading histories, equities in the Legal Cannabis and Medicinal Marijuana sectors are starting to develop important and identifiable levels
Themes and Opportunities
- Widespread Social Acceptance
- Inevitably Legal Federally
- Recreational Cannabis
- Medicinal Marijuana
- Peripheral Opportunities
Aphria Inc. – Support at the $11.30 level has broken. It has now become resistance. Longer-term the $13 level is important. The lows in February were right around it and it was pretty much the exact high in early and mid-May, and early June, and early July. There will probably be resistance there again if it trades higher.
Aurora Cannabis Inc. – ACB is testing support around the $7 level. This level was support in April and in May.
Cronos Group Inc. – The $8 and the $5.50 levels are important in CRON. $8 was the recent high on June 6th and 7th, again on June 21st and 22nd, and it was also the top in April. It was also the low in January and the top in February. The recent lows in April and May have been right around the $5.50 level. These levels will probably continue to be resistance and support. Short-term there may be a bounce because it is oversold and trading where it found a bottom at the end of June.
Emerald Health Therapeutics Inc. – EMHTF sold off hard after breaking support at the $3 level. It broke its downtrend and found support around the $2 level. It is starting to uptrend. I discussed this as a possible trade idea last week. I took a position at $2 on July 17th. My stop out is at $2 and my sell target is $2.50.
GW Pharmaceuticals – GWPH is testing support around $140. There is support there because it was the top in January and again throughout the second half of April. It will probably continue to be support going forward. There may be a trade here. I would consider going long if the downtrend line breaks. My stop out would be $140 and my sell target would be around $152 which is where the most recent high was.
Horizons Marijuana Life Sciences Index ETF – HMSLF broke support at the $13 level. It should now become resistance. Longer-term there should be resistance at the $15 level. It was the top throughout March. It was also the top on June 7th and again on June 21st. Both times it became overbought and sold off.
Innovative Industrial Properties, Inc. – IIPR broke support at the $34.75 level. It is now resistance. There is support around $32.50. It is where the lows where in May. These two levels should continue to be important in the short-term.
Kush Bottles Inc. – KSHB is testing support at the $4.50 level. This level has been the low over the past month. It was also the low in February and March.
Medreleaf Corp – LEAF recently ran into resistance around $28 – 29. These are the same levels that it found resistance around early in the year. After some very choppy action it has sold off from $31 to $25. There may be some support around the S24.75 level. It was the top at the end of January and where the low was on June 26th.
Scotts Miracle Grow – SMG is testing support around the $79.50 level. This was the low is early May and mid-June. The recent highs have been around the $87.50 level.
Canopy Growth Corporation – The levels around $42 are important resistance for WEED. They were the top in January. They have also been the top since early June. At the end of June the $42 level was broken but it quickly failed after becoming overbought. There is some support around the $33.50 level because it was the top in March.
The Canadian / US Dollar exchange rate needs to be considered, especially if you are going to hold them for the long-term. Obviously, fluctuations in the currencies will affect returns. Many of these equities are Canadian Companies trading on Canadian Exchanges. The Canadian dollar is strongly influenced by the price of commodities.