Scotts Miracle-Gro

12/20/16 12:35:19 PM

by Koos van der Merwe

The share price of Scotts Miracle-Gro has jumped in the last six months.

Security: SMG
Position: Accumulate

The Scotts Miracle-Gro Company is a manufacturer and marketer of consumer lawn care and garden products in North America. On December 12th, the company announced that it plans to offer, subject to the market, senior notes due in 2026. The net proceeds of this offering will be used to reduce borrowings. With the recent Marijuana Legalization initiatives, the share price is rising strongly. Scotts Miracle-Gro has recently tapped into the marijuana market by selling equipment for hydroponics, a method that allows the growth of cannabis plants indoors.

Figure 1. Monthly chart.

Graphic provided by: AdvancedGET.

The chart in Figure 1 is a monthly chart showing how the price rose from $15.87 in November 2000 to its present price of $98.66. An Elliott wave count is suggesting that the chart is in a Wave 5 of WAVE 3 and could start falling in a WAVE 4 to either $83.44 or $74.73. The RSI indicator shown on the chart is at overbought levels but has not yet suggested a sell.

Figure 2. Daily chart.

Graphic provided by: AdvancedGET.

The chart in Figure 2 is a daily chart with an Elliott wave count suggesting the stock price is completing an Elliott Wave 5 and should fall to the 4th Wave of lesser degree, somewhere between $83.61 and $78.75. The JM Internal Band indicator is still in buy mode. The JM Internal Band is a 15 period simple moving average offset by 2% plus and 2% negative. A move above the upper band suggests a buy and below the lower band a sell.

With the future legalization of marijuana in Canada and the US, buying pot related shares and holding them could be the way to go. Scotts Miracle-Gro does not produce or grow marijuana, but the company does provide the tools to grow "the weed" indoors. A share to watch.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address:	3256 West 24th Ave
	Vancouver, BC
Phone # for sales:	6042634214
E-mail address:	petroosp@gmail.com

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ELLIOTT WAVE

Scotts Miracle-Gro

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