Canopy Growth Corp (OTCMKTS:TWMJF) (FRA:11L1) enjoyed a strong run, as did the rest of the cannabis trade complex. Much of the technical damage experienced over the past 10-weeks has been mitigated, to a significant degree. But with prices stalling out and volume grinding lower, bulls are seemingly running out of steam. We take look at what comes next for Canopy and the rest of the sector.
Currently, Canopy Growth is trading higher by $0.37 to $30.23/share (↑1.24%). Although they announced a modest supply agreement with Yukon Liquor Corporation to provide up to 900 kg of cannabis products for the upcoming adult retail market, the news hasn’t seemingly had much impact. Neither relative price vis-à-vis its peers, nor volume has really excited today.
The same holds true for the cannabis market in general. The Horizons Marijuana Life Sciences Index ETF(TSE:HMMJ) has currently flatlined, now down ↓0.12% after peeking modestly higher around 11am. Other sector co-leader, Aurora Cannabis Inc, has joined the buyer’s strike, falling below the $8.70/share pivot range we initially wrote about last week. Trading volumes look to finish anywhere between ↓25-50% below average for most of the sector; Canopy Growth may not even make it that far.
| Company | Last | Change | Change % | Volume |
| Hiku Brands Company Ltd. | 1.78 | 0.12 | 7.23% | 288.93k |
| Canopy Growth Corporation | 30.6 | 0.74 | 2.48% | 3.14m |
| Aurora Cannabis Inc. | 8.63 | 0.19 | 2.25% | 7.38m |
| Abcann Global Corporation | 1.61 | 0.03 | 1.90% | 707.69k |
| The Hydropothecary Corporation | 4.14 | 0.07 | 1.72% | 869.17k |
| THC Biomed Intl Ltd | 1.35 | 0.02 | 1.50% | 175.99k |
| Emblem Corp | 1.55 | 0.02 | 1.31% | 483.13k |
| MYM Nutraceuticals Inc | 1.71 | 0.01 | 0.59% | 333.90k |
| CannTrust Holdings Inc. | 6.45 | 0.01 | 0.16% | 263.52k |
| CanniMed Therapeutics Inc. | 33.54 | 0.01 | 0.03% | 84.69k |
| Maricann Group Inc. | 1.75 | 0 | 0.00% | 1.22m |
| Namaste Technologies Inc | 1.61 | 0 | 0.00% | 1.11m |
| WeedMD Inc. | 1.58 | -0.01 | -0.63% | 123.77k |
| InMed Pharmaceuticals Inc. | 1.27 | -0.01 | -0.78% | 162.58k |
| Emerald Health Therapeutics Inc. | 4.85 | -0.05 | -1.02% | 648.33k |
| MedReleaf Corp. | 18.99 | -0.2 | -1.04% | 164.26k |
| The Supreme Cannabis Company Inc. | 1.68 | -0.02 | -1.18% | 575.82k |
| Cronos Group Inc. | 7.33 | -0.11 | -1.48% | 1.55m |
| OrganiGram Holdings Inc | 3.89 | -0.06 | -1.52% | 405.11k |
| Aphria Inc. | 11.14 | -0.2 | -1.76% | 4.33m |
| Newstrike Resources Ltd. | 1.01 | -0.02 | -1.94% | 1.07m |
| Invictus MD Strategies Corp | 1.89 | -0.04 | -2.07% | 346.87k |
| Cannabis Wheaton Income Corp. | 1.54 | -0.05 | -3.14% | 1.65m |
| Cannabix Technologies Inc | 1.97 | -0.08 | -3.90% | 777.10k |
| Isodiol International Inc. | 0.96 | -0.09 | -8.57% | 5.11m |
With Canopy Growth approaching $30.00/share and the 50-Day MA just under, let’s look at the updated technical take:
Credit: midasletter.com
From my perspective, buying programs attempted to rally WEED between 10:30-10:50am this morning after three successful defenses of the 50-Day MA ($29.72). Although buyers were able to pierce the underside of the April 16 upper channel, zero follow-through occurred. Volume has again collapsed, suggesting that buyers have given up on the attempt. This leaves Canopy Growth oscillating aimlessly within the recent channel, trending back towards the 50-Day MA.
From here, a couple of likely scenarios exist:
1) Prices begin to drift down towards the ’50’, where yet another defense by the bulls will need to be waged.
2) Prices consolidate above the ’50’, and bulls regroup with added impetus to test channel highs.
All things considered, I believe scenario #1 is the most likely one. The buying algos have already showed their hand, and failed to generate much interest at & above near term resistance points. Furthermore, overall market volume is not supportive of a higher, generalized move forward. Canopy Growth has released several smaller press releases which have failed to move the needle much. Today’s supply agreement—albeit modest in the greater scheme of things—is no exception.
However, it’s worth noting that bulls remain in charge until otherwise noted, so both scenarios are very much in play.
The key short term technical levels are as follows:
↑$30.50-30.65: ST target $32.00 area with possible buy-side extension to $34.75
↓$29.50: ST target to $28.60 with possible sell-side extension to $26.50 area
Depending on what occurs next, Canopy could easily see extensive positional jockeying around the ’50’ as experienced in early March. Surely, that wasn’t a fun time for Canopy swing traders looking to make a few points. Considering the narrowing triangular configuration currently ongoing, the potential for much near term noise exists. This may manifest itself in positional jockeying around its 50/100-Day MA before picking a broader direction.
Looking at the bigger picture, I believe the potential exists for the long-anticipated Canadian legalization trade to occur if/when Canopy Growth breaks out of its ascending triangle. There’s a lot of pent up energy and demand in that formation—but we’re not there yet. It’s certainly something we’re keeping an eye on as we grind towards the late innings.
Investors looking to optimize entry points should position accordingly.
Credit: midasletter.com
