Taking a different approach today, starting with the long term weekly chart. ACB has a bearish reversal candle on the weekly chart and a potential volume climax. The weekly trend is not at risk of being lost anytime soon because of how hard we have run up. Our weekly support currently is at 7.65 and now that we've lost the daily uptrend we are in search of a new weekly support level. We have support with weekly MA20 and MA50 in the low $9 range. Update these levels weekly.
"So, what happened this past week?"
This is a question a few people have asked me in person and online over the past 24 hours. Let's go back to the daily chart to look at the setup we had going into last week.
Monday we saw continuation of the daily breakout from the previous Friday and finished strong at the high of the day. In almost every idea I've published over the past few weeks I've been reminding people that the sector has run over 100% in just a few weeks, and that was neither normal nor sustainable. Therefore, we were looking for a sell-the-news reaction to legalization. I was expecting that Wednesday and we got that on Tuesday instead, in the form of a gap up open, a volume climax and a bearish reversal candle. Wednesday and Thursday we saw a weak bounce attempt with a potential daily bear flag setup, with the low of Wednesday a must hold level. ACB has not yet lost that level, making it a stronger chart than Canopy which broke that level on Friday and confirmed the daily bear flag.
ACB currently sits within a daily range between 11.91 support and 14.36 resistance. On Friday we saw the bulls make an attempt at that resistance but fell short and dumped for the rest of the day, finishing close to the low of the day on increasing bear volume and looking to start with further weakness into next week. ACB has wicked below the daily MA20 but has yet to close below that level. The daily chart has broken below an RSI support line and the MACD is initiating the strongest bear move it's made since back in July. As I've mentioned we've already lost the daily uptrend; losing 11.91 support would initiate a daily downtrend with a lower high and a lower low on the daily chart.
The $9-10 range has good support with the MA50, MA100 and MA200 all overlapping in this range. Update these levels daily. With weekly and daily indicators all lining up, I would expect the bulls to defend this level on the longer term timeframe.
The 4hr chart shows the clearest details in my opinion.
Bulls are trying to hold 12.69 as the higher low in the 4hr equilibrium but we're not yet confident that our higher low is set. This is a tightening range that could continue for several days before we see a clear break of this pattern. I have no real interest in playing within this pattern because the action is generally choppy, and I know the break of these tightening ranges will carry significant momentum and followthrough for me to play either as a bull or a bear. Let's zoom in for more detail better explain why I anticipate further downside.
Looking into the hourly chart we see exactly why we have a setup for further weakness with an hourly bear flag. Friday we bottomed out when CGC hit hourly oversold and the sector saw very weak bounces on low volume when compared to the bear volume on the dump. Confirming that bear flag by breaking 12.69 means the bulls have not yet found their 4hr higher low and we will continue to look down towards 11.91 support. For anybody interested in playing within this range, the closer we get to 11.91 the better your Risk:Reward becomes as you have an entry much closer to your stop loss level.
If you're the type of person looking years out and holding, you don't care much about the last half of this post but you are very interested in the weekly chart above. While the weekly trend on ACB is not yet at risk Canopy will be testing that level on Monday. This signal from the sector leader gives you an opportunity to stop out and look to reload, for example, 10% more shares for 10% cheaper with the same amount of capital. That's one more way you can compound your gains on these positions even when we see consolidation on the longer term charts.
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For anybody looking at any individual stock it is imperative to keep an eye on the overall market. The correlation of every individual name and sector to SPY market is very real and the market is showing significant weakness over the past three weeks with warning signs of further potential weakness potential into next week.
By the way, I do analysis on the entire sector across all the mj charts I publish. If you're not looking at all the names I talk about, you're not getting the full sector-wide analysis. Follow me to get updates when I publish ideas and pay attention to the mj names you typically don't look at too, so you can stay in the know and get the full picture.
"So, what happened this past week?"
This is a question a few people have asked me in person and online over the past 24 hours. Let's go back to the daily chart to look at the setup we had going into last week.
Monday we saw continuation of the daily breakout from the previous Friday and finished strong at the high of the day. In almost every idea I've published over the past few weeks I've been reminding people that the sector has run over 100% in just a few weeks, and that was neither normal nor sustainable. Therefore, we were looking for a sell-the-news reaction to legalization. I was expecting that Wednesday and we got that on Tuesday instead, in the form of a gap up open, a volume climax and a bearish reversal candle. Wednesday and Thursday we saw a weak bounce attempt with a potential daily bear flag setup, with the low of Wednesday a must hold level. ACB has not yet lost that level, making it a stronger chart than Canopy which broke that level on Friday and confirmed the daily bear flag.
ACB currently sits within a daily range between 11.91 support and 14.36 resistance. On Friday we saw the bulls make an attempt at that resistance but fell short and dumped for the rest of the day, finishing close to the low of the day on increasing bear volume and looking to start with further weakness into next week. ACB has wicked below the daily MA20 but has yet to close below that level. The daily chart has broken below an RSI support line and the MACD is initiating the strongest bear move it's made since back in July. As I've mentioned we've already lost the daily uptrend; losing 11.91 support would initiate a daily downtrend with a lower high and a lower low on the daily chart.
The $9-10 range has good support with the MA50, MA100 and MA200 all overlapping in this range. Update these levels daily. With weekly and daily indicators all lining up, I would expect the bulls to defend this level on the longer term timeframe.
The 4hr chart shows the clearest details in my opinion.
Bulls are trying to hold 12.69 as the higher low in the 4hr equilibrium but we're not yet confident that our higher low is set. This is a tightening range that could continue for several days before we see a clear break of this pattern. I have no real interest in playing within this pattern because the action is generally choppy, and I know the break of these tightening ranges will carry significant momentum and followthrough for me to play either as a bull or a bear. Let's zoom in for more detail better explain why I anticipate further downside.
Looking into the hourly chart we see exactly why we have a setup for further weakness with an hourly bear flag. Friday we bottomed out when CGC hit hourly oversold and the sector saw very weak bounces on low volume when compared to the bear volume on the dump. Confirming that bear flag by breaking 12.69 means the bulls have not yet found their 4hr higher low and we will continue to look down towards 11.91 support. For anybody interested in playing within this range, the closer we get to 11.91 the better your Risk:Reward becomes as you have an entry much closer to your stop loss level.
If you're the type of person looking years out and holding, you don't care much about the last half of this post but you are very interested in the weekly chart above. While the weekly trend on ACB is not yet at risk Canopy will be testing that level on Monday. This signal from the sector leader gives you an opportunity to stop out and look to reload, for example, 10% more shares for 10% cheaper with the same amount of capital. That's one more way you can compound your gains on these positions even when we see consolidation on the longer term charts.
_____
For anybody looking at any individual stock it is imperative to keep an eye on the overall market. The correlation of every individual name and sector to SPY market is very real and the market is showing significant weakness over the past three weeks with warning signs of further potential weakness potential into next week.
By the way, I do analysis on the entire sector across all the mj charts I publish. If you're not looking at all the names I talk about, you're not getting the full sector-wide analysis. Follow me to get updates when I publish ideas and pay attention to the mj names you typically don't look at too, so you can stay in the know and get the full picture.