CGC has completed a classic 5 wave pattern, which is very visible as outlined. Not drawn is also a channel, which shows the current top at channel resistance. Also, we have major divergence on the weekly RSI as price has went up, but momentum down. The timing is impeccable as many everyday people have been piling into pot stocks as it is being legalized tomorrow in Canada and topping out. This is when the smart money is going to get out as the dumb money is buying. Everyday people think things will go up after good news comes out, but the big investors already have bought before these things and rely on you buying so they can sell to you at the top. Keep in mind these companies aren't even profitable yet and have billion dollar valuations. This is just pure speculation from people and as we enter into a recession and the stock market tops out these stocks will fall very hard with the rest. The following is paragraph from Wikipedia explaining the characteristics of a 5th wave;
"Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak). At the end of a major bull market, bears may very well be ridiculed (recall how forecasts for a top in the stock market during 2000 were received)."
My final advice is to sell immediately and take profits. I expect prices to go as low as the $6 to $12 range before resuming the long term trend. Once that happens as a logical investor one can then evaluate the profitability of this new industry and make a wise investment choice.
"Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak). At the end of a major bull market, bears may very well be ridiculed (recall how forecasts for a top in the stock market during 2000 were received)."
My final advice is to sell immediately and take profits. I expect prices to go as low as the $6 to $12 range before resuming the long term trend. Once that happens as a logical investor one can then evaluate the profitability of this new industry and make a wise investment choice.
Comment:
I expect all pot stocks to sell off heavily as many are showing a clean 5 wave pattern. Also, I do think the industry as a whole will be great, but the issue is we just aren't there today as far as having consistent profits.