For his second "Executive Decision" segment on Friday night, Jim Cramer checked in with Bruce Linton, chairman and co-CEO of Canopy Growth Corp. (CGC) , the Canadian cannabis provider. This week Canada is set to legalize recreational marijuana. Shares of Canopy have soared 68% over the past three months.
Linton said other countries will be watching Canada, he said, and we'll see what that means for legalization and medical use in other countries. Linton added that the cannabis industry has the ability to disrupt alcohol, cigarettes and several pain pharmaceuticals, which could total a $500 billion market opportunity.
Sounds bullish but let's take a break and look at the charts and technical indicators.
In this daily bar chart of CGC, below, we can see that prices are up five-fold over the past 12 months. CGC was trading at $10 back last October and now is trading around $50 with spikes above $55 last month. CGC is currently above the rising 50-day moving average line and the bullish 200-day line. The 200-day average line was briefly tested in August.
The daily On-Balance-Volume (OBV) line shows a strong move up in August (as Constellation Brands (STZ) announced their decision to buy shares) followed by a sideways movement from early September as prices consolidated.
The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside in early September but has narrowed recently towards a fresh outright go long signal.
In this weekly bar chart of CGC, below, we can see a more impressive price movement from late 2015. Prices are above the rising 40-week moving average line.
The weekly OBV line shows strength and the MACD oscillator is pointed up.
In this daily Point and Figure chart of CGC, below, we can see a consolidation pattern since late August (look for the "9" on the chart). The computer program has generated an upside price target of $57.71 which would be a new high for the move up.
In this weekly Point and Figure chart of CGC, below, we can see a longer-term upside price target of $118.
Bottom line strategy: Risking below $45, traders and investors could go long CGC and add to longs above $54. $58 and then $75 are my nearby and intermediate term price targets.