Cronos Group Inc: Price Trend Change May Be Imminent

Benjamin A. Smith
|

Cronos Group Inc (CVE:CRON) (NASDAQ:CRON) stock has been bleeding out in recent times. But if our interpretation of the charts is correct, a tradable and/or investable bounce may be forthcoming. We provide detailed analysis of CRON’s price action below.

To get an idea of how weak Cronos Group stock has been, consider that CRON has declined 12 out of the past 15 trading sessions. Of those three ‘positive’ days, the average increase was just $0.2133/share, with the highest rise occurring Wednesday (↑$0.26). It’s been nothing less than a controlled demolition over the past three weeks, where volume—and volatility—has gone on hiatus. The lack of any tangible buying pressure has kept bears in control.

But times may be changing. If we parse down further into the 30-minute volume profile, something very perceptible stands out. For the first time in 3 weeks, an above-trend cluster of bearish volume was unable to capitulate prices past the previous low. Furthermore, this reality sets up potential higher-low base support, giving bulls an anchor in which to make a stand. Take a look:

CRON gave a brief glimpse of its bounce potential on October 10th, with afternoon price action mimicking—to a lesser degree—Aphria Inc. after word of Altria’s interest filtered through the marketplace. Aphria increased ↑15.12% after the dissemination, while Cronos Group rose ↑8.47%. On a percentage basis, CRON reacted much more precipitously than peers CannTrust Holdings, Hexo Corp., Organigram Holdings—every major LP on Canadian exchanges.

Whether that reason resides with CRON’s oversold condition, or market perception that it, too, is a transnational conglomerate partnership candidate doesn’t matter much. What’s relevant is that for the first time in weeks, bears are encountering push-back moving prices lower. Should the cannabis market—which has held up exceedingly well considering the pummeling of risk assets—catch a bid, CRON could be an ideal swing candidate at these levels. Entry-conscious and long term investors may also find these levels attractive.

Depending on where the stock gaps tomorrow, the risk/reward profile seemingly favors bulls. Assuming a neutral open, bulls risk 40 cents downside with near term upside potential of $1.00+. Should prices break $10.00/share and beyond, possibly much more. It’s all about defined risk positioning at this point. With bulls making a stand, and with a stock price down ↓38.89% since September 19th, it’s an open question how much longer bears can contain prices.

But for that to change, bulls must show up—even a little. There hasn’t been much evidence of that happening. We will be watching tomorrow to see whether a new paradigm may be forming.

Key technical levels to watch:

Support: $8.95 (minor); $8.68 (six week low – major)

Resistance: $9.51 (minor); $9.93-$10.08 (closing high above this level on the hourly, along with above trend volume, would signal broader momentum shift).

Overbought/oversold levels (20) RSI 30-Min >: neutral and rising

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...
More Info...

[email protected] |

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.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Free Newsletter,
Priceless Content.

Get more of Midas Letter delivered right to your inbox.

Special Offer

Sign-up today and receive free and immediate access to three recently published special reports!