Canopy Growth Corp Nears Post-NYSE Highs With Serious Momentum Behind It

Benjamin A. Smith
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Canopy Growth Corp (TSE:WEED) (NYSE:CGC) (FRA:11L1) is again outperforming the sector today, shrugging off Friday’s Senate decision to severely limit marketing swag. In fact, it’s now trading just a shade below its May 24 New York Stock Exchange debut high, on volume which may eclipse that date.

Currently, Canopy Growth is trading up $1.91 to $39.61/share (↑5.07%). The price action seems to be taking a rather decidedly Cronos Group post-NASDAQ iteration, except with a slight lag. If Canopy breaks the magical post-NYSE barrier of $40/share, it just may usher in that pre-June 7 cannabis rally many investors were looking for.

Taking a look at the charts, we see some important aspects which suggest a challenge (and break) of $40/share may be possible.

The first such thing is volume. One of the best tells for overall investor interest is how the volume profile shapes up after 10:00am. With traders pushing up prices on higher than on-open volume—especially in an absence of news—it shows bulls are firmly in control. As I type, prices are only about $0.40 away from Canopy Growth’s May 24 NYSE debut day, so at minimum, a test of that level is in store.

Where it goes from there depends on whether volatility can keep expanding on this current run. As seen in the chart above, volatility (as measured by Bollinger Bandwidth) is printing at its third higher level post-NYSE. Should that peak at levels last seen during the May 28 session, prices should pause at the $40/share level (at least temporarily). If, on this run, volatility expansion breaks through the May 28 peak, prices in Canopy Growth could easily accelerate and test all time highs of $44/share on this run.

Bruce Linton speaks with Midas Letter CEO James West about Canopy’s U.S. listing, institutional investment interest, and more

With the pivotal June 7 Bill C-45 vote just days away, the potential catalyst is already in place.

At this point, most of the cannabis sector has not participated with Canopy’s notable move. Look for others to join the party in Canopy Growth Decidedly breaks the key $40 near-term level. The pre-legalization trade investors were anticipating may be late, but better late than never.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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bsmith@midasletter.com |

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

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