The U.S. listed shares of Canadian-based Canopy Growth Corp. (CGC) are soaring higher this morning on news that Constellation Brands (STZ) said it will invest about $4 billion in the cannabis company. Media reports say that STZ will increase its ownership interest in CGC by acquiring 104.5 million shares directly from the company.
With the price of CGC up around 8% this morning a fresh look at the charts is in order.
In this daily bar chart of CGC, below, we can see that just yesterday prices were in a position to test the rising 200-day moving average line. The slope of the 50-day moving average line was bearish and the On-Balance-Volume (OBV) line was in a decline.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line.
All of this was bearish but today prices gapped sharply higher above the 50-day average and over the August high. Prices are off their best levels of the morning but still up sharply.
In this weekly bar chart of CGC, below, we had a mixed picture. Yesterday prices were right above the rising 40-week moving average line.
The weekly OBV line was off its best level but showed improvement recently.
The trend-following MACD oscillator was in a bearish take profits mode. A close on Friday will change the weekly chart and the indicators.
In this Point and Figure chart of CGC, below, we can see a breakout at $37 and a potential price target of $61.
Bottom line strategy: The quick reversal on the chart from very weak on Tuesday to very strong today will take some time to sort itself out on the charts. A pullback to the $30-$29 area could develop in the short-term. The easy call would be to recommend going long but I want to see more price action before getting involved again from the long side.