The cannabis industry has been growing in the last years. This is why we are starting to consider it an attractive sector to analyse. In this post, we’ll review what to expect for the coming months to the cannabis sector. In the first place, we’ll analyse MJ, the largest cannabis ETF, and its 3 top stocks CRON, ACB, and CGC.
MJ – The Marijuana ETF
MJ is the largest Marijuana ETF, which have $MM 1,241.82, and holds 33 stocks. The MJ performance YTD (Year to Date) raises 38.16%, above the 22.43% gained by PHO, and the 15.87% reported by S&P 500 (SPX).
Long-term, the MJ daily chart shows a sideways structure, with its lowest level at $21.99, and its highest level at $45.40. Short-term, the price is consolidating a rally started from $23.41 in December 2018. The MJ ETF could develop a second bearish leg, with a potential target between $31.68 and $30.17. From this area, the price could find buyers waiting to incorporate it to their long positions. The first long-term target is the re-test of the previous record high at $45.40. The invalidation level is placed at $23.01, the origin of the last rally.
CRON – Waiting for a Second Bullish Leg
Cronos Group (CRON), is a Canadian company listed on the Toronto Stock Exchange (TSE), and NASDAQ. Founded in 2012, its IPO was on December 17, 2014, with an initial price at CA$1 per share. After the IPO, the biotechnology company declined to 0.14, from where CRON made an unbelievable rally topped at 32.95, a 23,535.71% appreciation. CRON daily chart price, in log scale, is developing a retracement which could visit the previous lows area.
CRON 4-hour chart shows the last bullish cycle started on October 30, 2018. It is likely that the price continues its decline to the area between 15.38 and 13.50. After this move, buyers could drive the price to previous record highs. The invalidation level is at CA$8.47.
ACB – Watching for a New Rally
Aurora Cannabis (ACB ) is a Canadian cannabis producer listed in the Toronto Stock Exchange (TSE) and has a market cap near to 8.06B. The ACB daily chart (log scale) shows a sideways move as a complex corrective structure. The consolidation structure could make a new low, which should not lower than (C).
Once ACB completes the wave (E), the price should develop a bullish cycle in five waves. Remember that to define the potential bullish Wave 3 target Wave 2 must to be complete. Lower volume gives us signals of the consolidation structure.
CGC – Consolidation Structure Calling for Continuation
Canopy Growth Company (CGC), is a stock listed on the Toronto Stock Exchange, and in the New York Stock Exchange (NYSE). Created in 2013 named as Tweed Marijuana Inc., but in 2015 renamed as Canopy Growth Corp.
The CGC daily chart (log scale) shows a rally that started on August 24, 2015, when Canopy found buyers at 1.01 level. During the bullish trend, the cycle topped at 59.25; it means over 5,766% appreciation. Since the second half of 2018, the weed company started to increase its volume and to move sideways.
In the 1-hour chart, CGC shows its price making a corrective structure keeping its bullish bias. The bearish wedge breakout could drive Canopy to record highs with a potential profit target at $66. The invalidation level is below 25.29.
In summary, using different Elliott Wave tools, we observe that the cannabis sector is in expansion and keeps a bullish bias. In general, the four assets studied have the potential to see fresh record highs in the coming months.
Finally, Remember that the price is not forced to act as our forecast implies. The charts released corresponds to the Elliott Wave Theory application.