Canopy Growth Corp. (CGC) has been stuck in a wide trading range since January. Volume was heavy in the past three months but prices were unable to break above the January high.
While prices are still in a longer-term uptrend this recent heavy volume suggests to me that early buyers of CGC may have become aggressive sellers on strength. Let's go through all of our charts and indicators.
(For more on CGC, see Why Stocks Keep Charging: Cramer's 'Mad Money' Recap.)
In this daily bar chart of CGC, below, we can see that prices have crossed above and below the 50-day average line but in July prices moved below the line and the slope of the line turned bearish. CGC is still above the rising 200-day line but a close below $23 would break it.
I talked about the heavy volume the past three months in the paragraph above, but look closer - the volume was heavy in January when prices spiked to $36 but still heavier in June and prices could not rally over the prior $36 peak. Buyers must have met equally motivated sellers.
The daily On-Balance-Volume (OBV) line broke out to a new high but prices failed.
The Moving Average Convergence Divergence (MACD) oscillator turned lower in June and is now in bearish territory below the zero line.
In this weekly bar chart of CGC, below, we can see that prices have come a long way in the past three years. Prices are still above the rising 40-week moving average line but it won't take much of a decline to break it.
The weekly OBV line shows a peak and the MACD oscillator has been in a take profits mode since December.
In this Point and Figure chart of CGC, below, we can see a modest upside price target but also that a decline to $25.17 will be a new low and could weaken the picture.
Bottom line strategy: Some early buyers of CGC have major gains and they could have sold significant positions in June and July. I do not have hard information of that but it wouldn't surprise me. Keeping that in mind I would stand aside and not get involved from the long side.