Canadian CANNAINVESTOR Magazine May 2017 - Page 116

One of the best parts about technical analysis in comparison to a pure fundamental approach in my opinion is its ability to adapt to present day. Companies only report their financials four times a year and yet their stock trades for roughly 252 days in a year (give or take a few leap years in there). What are they trading on? If you are purely in a company because of ‘x’ revenue target or ‘x’ cost per gram or ‘x’ A-List Celebrity etc. then you are sitting and ‘trusting’ your gut while the market moves without you. In the case of the cannabis stocks which move in a very volatile range on a given day, you are missing huge chances to take advantage of price fluctuations in order to maximize gains and limit downside.

Potential Areas of Support

As virtually all of the readers of this article are aware, we have seen selling pressure in the Canadian cannabis sector on the backs of a decision that legitimizes the entire space by Trudeau (especially the licensed producers). Having been invested in the industry now for 2-3 years it is certainly not the first time we have seen a ‘sell the news’ take place. It is my opinion that on a fundamental basis (remember I’m not ALL technicals) that this recent sell off has created another buying opportunity for value investors and traders alike. With this in mind I thought we might want to look at some charts for potential areas of support / resistance for some of our licensed producers in order to consider future entries and exits: