McGuireTO

Looking at previous CGC all time highs for clues into next week

NYSE:CGC   CANOPY GROWTH CORPORATION
The similarities I've highlighted here look better on WEED than on CGC because Jan 15th saw the TSX trade but not the US exchanges. That said I'm looking at similarities in the first oversold bounces following the last two all time highs at 35.88 in January and 36.55 in June. Subsequent those bounces we saw a tightening range playing out across more than a week of trading before the equilibrium finally broke - down.

In each of the previous two examples the price set a lower low compared to the low of the oversold bounce. It's very possible this happens again, but with legalization being such a huge catalyst, it's also quite likely that support holds and we enter into a larger daily equilibrium prior to continuation of the current bull move.

The most important support to me heading into next week is 40.68. The best case scenario for the bulls is to hold 46.20 to show they're in absolute control over the coming days.

There are several fundamental things I'm watching here. CNBC is covering the MJ sector numerous times each day, and I've noticed a shift in their coverage from "stocks rocketing higher", to "we're in a bubble." This shifted with the implosion of TLRY on Wednesday and the 50% drop in share price within an hour (now down a full 65% from the highs). CNBC has an agenda here, and that's currently a risk to bullish positions in the sector.

Second is the amount of short interest in these stocks right now. each of WEED, ACB , and APH are among the most shorted stocks on the TSX, and each have had an incredible increase in short positions opened over the course of September (regrettably I do not know if this information exists for CGC - if someone has this info please hit me up in the comment section below!)

Finally, there is the potential of other major catalysts such as global companies entering into the sector in the form of investments, partnerships, and other agreements or LOIs. These events have the potential of squeezing short positions to cover, now so they can enter again later.

@DonnaSko, on a previous idea you asked about my thoughts on a long position in CGC . I don't like a long position right now; If this tightening pattern does break upwards and we see new highs, I fully expect a selloff on or within a few days (before/after) of October 17th, 2018 legalization date, followed by a long drawn out period of consolidation. If for whatever reason we do not see new highs, and break down setting new lows from here, I will have to reassess the situation from that stand point. From here I only really like two entries for longs. The first would be to bottomfish against 40.68 support with a stop-loss below that price to protect your capital should should the sector break down from here for whatever reason. The second would be to enter on the break of 52.60, which would be a bull-break of the current 4hr equilibrium we're currently suspended in. With an entry there I'd place my stop-loss below the most recent low, which is currently 46.20. Either way, I would absolutely take profit on or just before October 17th as I fully expect that catalyst to be a sell the news event, should we continue the bull run up until that date. Then I'd wait patiently to buy back in much cheaper for a long term investment position.
Thank you @MacGuireTO I appreciate your analysis. Very through thank you for putting in all this work on this stock. I appreciate the help. Thanks
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McGuireTO DonnaSko
@DonnaSko, my absolute pleasure! I'm happy you found it informative
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Love your analysis thanks
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McGuireTO jayrob4134
@jayrob4134, Thanks so much for stopping by! I always enjoy reading comments and hearing what other people think!
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moosie McGuireTO
I thank you, as well, for the insight and for the easily understandable way you present it (I'm an active trader all of 5 months, now.) You've confirmed my thoughts on the CGC run-up to Oct. 17th. I wanted to believe I could merely stay strong on the long, still, always knew that a sell/buy back would need to happen at some point. Thank you much, Sir!
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@moosie, thanks for the feedback!
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