High Expectations For A Budding Industry (Video)

High Expectations For A Budding Industry (Video)

Apr. 19, 2019 8:00 AM ET - StockWaves (Garrett & Zac)


-Many cannabis stocks have come down from recent highs correctively.

-Coincidentally many could start to mark local lows around April 20.

-We discuss a few of our most potent picks.

Mary Jane, weed, dope, pot, chronic, herb, ganga, bud, grass, kind, cannabis, THC, CBD, marijuana... reefer. Whatever you want to call it, the cannabis sector has seen some recent action after somewhat of a drought. 2017 was a breakout year for many new entrants into the medicinal marijuana realm, and many acted like crypto currencies did the same year. But then they lost their buzz for a while. While many sectors and the broad market are looking a bit tired the MJ party is about to get lit.


Horizons Medical Marijuana Life Sciences ETF (HMMJ) or (OTC:HMLSF) is a Canadian ETF that tracks many of the common stocks in the sector. It only started in 2017, but from the 2018 peak there is a very clear Elliott Wave corrective "WXY" flat pattern. Off the December low is a clear impulsive 5-wave move up that has proportions in-line with being only the wave 1 of a much larger move starting. It is currently retracing correctively as an abc for wave 2 with support in this 20-17 region. The 3rd wave should head toward the 40s into 2020 provided support holds.

In the video above we discuss some of our picks within that sector with string setups for upside soon: Canopy Growth (CGC) should have at least one nice swing higher remaining for the c-wave of a fifth near the end of a larger Ending Diagonal structure. With support extending from here to lower 30s but a normal target of 82+ for the (C)-wave the Risk:Reward here on CGC is favorable 1:4. Cronos Group (CRON) while also in a larger Diagonal structure is due for all of the fifth wave targeting 32+ (easily as high as 38-45+) from the 14-12 support region.

Canntrust Holdings (CTST) has very thin data for parts of the larger Primary degree wave 1 but the consolidation off the 2018 high is very clean as an expanded flat implying that the underlying trend is very strongly bullish (b/c it stretched the (NYSE:B)-wave to a new high). Off the December low we have similar strong wave (1) and a nice clear ABC consolidation as (2) w/ support here in the 6s for a (3) of P.3 targeting 23-28. Hexo Corp (HEXO) mirrors CTST closely with the same expanded flat and 1-2 start of the third with the (3) of P.3 targeting 14.44 or 20.86.

Tilray Inc (TLRY) was a newer IPO that came on the scene with a LOT of hype but has since faded perfectly according to the Elliott Wave path we laid out for it. We pretty much called a top on it in September recognizing that the final extension of the initial five waves up from IPO was a non-sustainable blow-off top and based on our CABpIPO pattern were looking MUCH lower. In October as it was nearing the end of a B wave bounce we were able to narrow our projection for a C-wave down targeting the 40s, as that pattern as followed through we have continued to add more detail for specific bottoming targets. Even if just a larger corrective bounce again TLRY offers substantial upside potential, and the near 43% short interest could provide some serious fuel for a short squeeze.

Disclosure: I am/we are long TLRY, , CTST, CGC, HMMJ, CRON, HEXO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

*StockWaves article/video published on SeekingAlpha. https://seekingalpha.com/article/4255298-high-expectations-budding-industry-video

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Zac Mannes is a senior analyst at ElliottWaveTrader.net and co-host of the site's Stock Waves service, which provides wave alerts and trade set-ups on individual stocks.