APHRIA

Aphria rally is following the lead of the SP 500. MJ sector still has some major growing pains and the sector needs to consolidate. My sector wide assumption is that all the stocks are going to be brought to the point of near collapse and only the ones with truly strong fundamentals will rebound (Aphria being one of them). There is a high chance in my mind that the MJ sector will re-test their lows at the very least. And since this is still a deep bear market, it won't take much for weak hands to fold.

-Technical set up is a Bearish market flat pattern.
-Also a broader Elliot wave view this would be wave 4, so still a wave 5 (re-test lows or lower lows) to come.

GL

Comment:

I formally declare this trade dead. I was never shorting it anyway, but wanted to avoid a price drop. The general indices did not crash as I expected because its being driven up by insane amounts of short covering. Check the NASDAQ, a typical day has more short volume than long, and some days its up to 70-80% short volume. That said, the bears are going to have to capitulate before the next leg down, and I think the only assured sign of that will be for the NASDAQ to move into a position where it looks like its establishing a new bullish trend channel off the old highs. To establish that channel it could hit 11,500. Seeing such a channel form would scare the shit out of any bears who are trying to hold strong and will have to capitulate their position at a massive loss, opening the door for the smart money to then go short.

So what does that mean for the MJ sector? The upward pressure in the indices can act like a spring board for higher prices, lasting potentially 2-3 months. If we won't be returning to lows then I think we will be hitting new highs (at least for Aphria. They are in terms of fundamentals the strongest and are extremely undervalued compared to their peers. In a bear market, I would anticipate Aphria's share price to suffer less, but in a bull market I expect it to perform with greater acceleration.

In the past, the MJ sector rallies have followed the momentum of the lead bull. Right now it is Aurora, which imo is the worst MJ company. Its momentum has already started to die out, and while other MJ companies have sunk to the red, Aphria has remained green. I think this can be an indication of who the market sees as the next lead bull.

Taking all of this together, I anticipate that Aphria will come close to its old highs during the summer, whereby a major sell off will be triggered for 1-3 months, allowing the stock to cool down somewhat and consolidate before the US election. Leading up to the election, the stock will likely pick up steam once more and if the democrats win or either presidential candidate announces a more pro-legalization policy, then we will break old highs and soar anywhere between $40-$100. It sounds absolutely mad, but I have seen this space develop for far too long to downplay the potential swings. GLTA

Comment:

OR. My original assessment was right.... It is crazy to see all the other MJ companies running up alongside Aphria. It doesn't make any sense because most of those companies are bound for bankruptcy. There isn't enough profits for everyone to survive, so it makes me think maybe my original assessment was correct and we won't see the true swing up until the competition is eliminated.

What to do what to do....

Comment:

Aphria's P/E Ratio is at 50 right now.... so all things considered the stock as it stands is quite expensive. I am going to tread very very lightly, no overnight holding.