For his final "Executive Decision" segment of Mad Money Wednesday evening, host Jim Cramer checked in Irwin Simon, chairman and CEO of Aphria Inc. (APHA) , the Canadian-based cannabis producer that's close to profitability.
Simon, formerly the CEO of Hain Celestial (HAIN) , said that Aphria has 1.6 million square feet of growing space and more than 1,000 employees. The company operates seven different brands in Canada, where cannabis is legal, and has operations in Germany and Italy as well.
Simon explained that Aphria's strategy is to perfect their operations in Canada so that they'll be ready when cannabis is legalized in the U.S. He said legalizing cannabis would give states much needed revenue to help replace money lost due to Covid-19.
Let's check out the charts of APHA.
In this daily bar chart of APHA, below, we can see a long decline into a March low. Prices rallied off the low in March and rose above the declining 200-day moving average line but made a big reversal on heavy trading volume in recent days. It looks like traders piled into APHA ahead of earnings and quickly dumped those positions when the numbers were disappointing.
The daily On-Balance-Volume (OBV) line shows a rise from March that matches the price action.
The Moving Average Convergence Divergence (MACD) oscillator is showing a bearish divergence this month as it makes a lower high when prices make a higher high. This divergence suggests that the upside strength is suspect.
In this weekly bar chart of APHA, below, we can see that prices made a rapid rally in 2017 and have spent several years giving back that advance and more. Prices are above the declining 40-week moving average line but there is chart resistance in the $6-$8 area.
The weekly OBV line shows some zigzag improvement from March but not sustained aggressive buying.
The MACD oscillator is finally testing the zero line from below. A failure at the zero line would not surprise me.
In this daily Point and Figure chart of APHA, below, we can see a potential downside price target in the $4.50 area.
In this weekly Point and Figure chart of APHA, below, we can see a potential upside price target but I suspect further basing action will be needed.
Bottom line strategy: The charts suggest that we should see some buying interest (support) in the $4.50-$4.00 area on APHA. Fine, but if this support is broken we could see a deeper correction. Avoid APHA for now. Wait for a bigger base to be established.