Curaleaf Holdings Inc. (CNSX:CURA) Attains Clear Blue Sky Breakout

Benjamin A. Smith
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Today, Curaleaf Holdings Inc (CNSX:CURA) (OTCMKTS:CURLF) had one of those defining sessions that may catapult CURA into investors consciences—permanently. Buoyed by strong sequential growth, re-iterated guidance and a CVS Health few saw coming, the stock appears poised to continue rallying tomorrow.

In light of Wednesday evening’s smashing earnings results and pharma deal, the move in Curaleaf Holdings didn’t come as a surprise. But perhaps the voracity of the move did. CURA obliterated the previous all-time high of $10.84/share, doing so on volume which eclipsed the previous benchmark by ↑116.57%. If ever there was a textbook and unadulterated blue sky breakout (BSB), this was it. No obstructions, no confusion.

In fact, finding a comparable “no-doubt” BSB in the cannabis space is challenging. While many have occurred, few have achieved the combination of triple-digit record volume and double-digit price breakthroughs. It’s the sector’s equivalent of the triple crown or perfect game.

In combination with still-percolating technical indicators, we think yesterday’s rally bears the hallmarks on a multi-day runner—or at minimum, for the preponderance of Friday’s trading session.

Of course, the volume and price action profiles of Thursday’s chart need little explanation. By busting out in unmistakable manner and finishing at the session’s high, there’s little evidence to suggest buyers will abandon the bid. While CURA is edging into “overbought” territory (RSI), there’s still room to maneuver before historic levels are threatened. MACD has just turned the corner.

Giving cover to Thursday’s move was GMP Securities analyst Robert Fagan, who reiterated his “Buy” rating and C$21.00 target. That’s a lot of runway for a stock which experienced that transformative “a-ha” moment which vaults it into a peer leadership position. Industry leaders have a tendency to trade within range of price expectations—not well away from it.

Making predictions about the upcoming intensity of CURA’s BSB is a fool’s errand. As we noted on March 5th when OrganiGram Holdings staged a BSB of its own, the voracity of each situation differs. It largely depends on a multitude of factors, from market conditions, share structure, individual news flow and more.

On the strong end in Village Farms International, which continues to forge record highs after breaking through on February 15th, 2019. A tight share structure in combination with an extended news cycle has kept bulls in firm control throughout. On the weak end is Cresco Labs, which BSBed in late-December—without defining volume—then proceeded to go nowhere for a month. Individual circumstances vary.

Either way, we can say with reasonable certainty that bulls are in a good position here. With no apparent front-loading occurring in Curaleaf Holdings stock in the days leading-up to Wednesday’s news (from Feb. 27-Mar.10, CURA lost ↓13.49% in value), and great volume/technical profiles, the buying and/or lack of selling could persist. Curaleaf’s lock-up expiry doesn’t arrive until April 27th—and even then it will be limited in scale.

While we’re covering the crystal ball on this one, it’s hard Curaleaf Holding’s breathtaking move in a one-and-done heading into Friday. The question most likely is, to which degree of green?

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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