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TECHNICAL ANALYSIS


Another Look At Marijuana Stocks

10/15/18 05:07:31 PM
by Koos van der Merwe

With the legalization of marijuana stocks in Canada just around the corner, is it time to buy?

Security:   ACB-T, APH-T, EMC-T, WEED
Position:   Buy

Justin Trudeau, the Prime Minister of Canada, has confirmed the official date for legal weed in Canada. The Prime Minister has said that recreational cannabis will be federally legal on October 17, 2018. So, which are the best weed stocks to own? Below are four stocks that have captured my attention.

Figure 1. Aurora Cannabis.
Graphic provided by: Omnitrader.
 
The first stock is Aurora Cannabis, a stock that has become one of the most sought after stocks among speculators hoping to get in early. The company is planning to list its shares on the US market as early as October 2018. The share does trade on the US OTC market under the ticker ACBFF. The share price surged this past week after reports that Coca-Cola was considering producing cannabis-infused drinks. Aurora's acquisitions so far are in 10 companies with sales and operations in 14 countries. Looking at the chart one can see how the share price rose from $5.29 on August 14 to its present price of $11.84. On September 17 the share price gave a buy as shown on the Vote line, based on the 3 strategies shown in green below the Vote line. The RSI Indicator is overbought but has not yet suggested a sell. Do notice that volume fell as the share price fell suggesting strength. A falling share price on falling volume equals strength. A falling share price on rising volume equals weakness. With the share price falling, one could purchase the share and hold.

Figure 2. Aphria.
Graphic provided by: Omnitrader.
 
The share of Aphria is another share that has captured my attention. The share price rose strongly from $9.26 on August 15 to a high of $21.93 by September 11. The chart is suggesting a sell based on the JM Variation Strategy. Do note that volume is falling suggesting strength. The RSI indicator is also falling suggesting weakness. Wait for a buy signal to be given.

Figure 3. Emblem Corp.
Graphic provided by: Omnitrader.
 
Emblem Corp (EMC) on the Toronto market is a cheapie to keep an eye on. The share price has risen from $1.22 on August 24 to a high of $2.12 by September 13, before falling to its present level of $1.66. The Vote line is suggesting a sell based on the Vervoort Stop Strategy. The RSI indicator is also trending down. And, finally, note that volume is also low. Keeping an eye on the share waiting for a buy is a must.

Figure 4. Canopy Growth Corp.
Graphic provided by: Omnitrader.
 
Finally, one must look at Canopy Growth Corp (WEED). The share price rose from a low of $32.15 on August 14 to a high of $74.45 by September 5 before correcting. The Vote line is suggesting a buy at $64.46 based on three strategies shown below the Vote line. Do notice that with the recent correction volume has fallen, suggesting strength.

On April 7, 2018, in an article "A Look At Marijuana Stocks", I suggested certain stocks that one should buy, but warned that caution prevails. Waiting for the buy signal to be given has proved very profitable. If one owns the stock, one should hold and see what happens when pot become legal in Canada. If one does not own any Marijuana stocks, waiting for a buy signal is a must.



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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