Aurora Cannabis (ACB) just got a new BFF in the form of Nelson Peltz as an adviser to the company. He probably did not indulge in smoking cannabis when he attended Wharton in the early 60's but I have no personal knowledge of what he did in Philly way back then. He does have a fair amount of experience through his Trian Fund with investing in many consumer products companies.
Either way, the price of ACB is moving up today and a fresh look at the charts and indicators seems like a good idea.
In this daily bar chart of ACB, below, we can see an interesting base pattern and accumulation (buying) on this chart. Use your imagination and draw a horizontal line across $8 or $8.50 and now you should be able to see a saucer-like bottom formation. Admittedly we are taking a little editorial license with the September/October rally to around $12.50 or so but don't let a rally get in the way of a good base.
Notice the increased trading volume from August? More and more traders and investors have become involved in the company and that is bullish.
The daily On-Balance-Volume (OBV) line does dip into December but it has firmed again. The weekly OBV line is stronger looking.
The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in January to a new outright go long signal.
In this weekly bar chart of ACB, below, we can see two consolidation patterns. One around $2 in 2016 and 2017, and a second one between $4 and $12 the past year. Buyers have bought ACD in the $6 to $4 area.
Volume has increased since August and the weekly OBV line is bullish with its new high leading the price action.
The weekly MACD oscillator just crossed the zero line for an outright go long signal on this longer time frame.
In this first Point and Figure chart of ACB, below, we can see a nearby upside price target of $8.60.
In this second Point and Figure chart an upside price target of $21.25 is being projected and a weekly close at $11 is a breakout.
Bottom line strategy: Cannabis is a new bull market that's in its early innings (though many in the media proclaimed that the rally in Tilray (TLRY) last year was a so-called bubble), in my opinion. I think ACB will be one of the winners in this space and $21 is my intermediate term price target. I would be a buyer and risk a close below $7 now.
Aurora Cannabis is a holding in TheStreet's Stocks Under $10 portfolio. Click here to learn more about this portfolio, trading ideas and market commentary product.
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