Cannabis player Tilray (TLRY) looks like it could move higher this Thursday morning, as the House passed the SAFE Banking Act that shields banks from federal prosecution if they conduct business with cannabis companies in states allowing legal weed. The Republican-controlled Senate is up next and the bill should pass there but with possible amendments. This looks like a good opportunity to take a fresh look at the charts and indicators of the former "high flyer" (no pun intended).
In this weekly bar chart of TLRY, below, we can see the once in a lifetime (or business career) parabolic surge from around $20 to around $300 in a blink of the eye. The kind of trade you wished you had made to retire on - a winning lottery ticket. Those outsized gains did not last long and prices are back down to around where they started.
In this daily bar chart of TLRY, below, we can see the other side of the coin as prices have worked lower and lower (did I say lower?) the past 12 months. TLRY is below the declining 50-day moving average line and the declining 200-day line.
The daily On-Balance-Volume (OBV) line has also been in a decline the past year as sellers of TLRY have been more aggressive.
Not everything is bleak as the 12-day price momentum indicator in the lower panel shows a bullish divergence from August to September as the rate of decline has slowed. Sometimes a bullish divergence from the momentum indicator can foreshadow a rally. Signals are not hard and fast and testable like other tools of technical analysis.
In this Point and Figure chart of TLRY, below, we can see a possible or potential downside price target of $20 or so. Price targets are not hard and fast and the chart can change with new activity.
Bottom line strategy: The charts of TLRY are a reminder that you should not fight the trend - up or down. That being said, the downtrend has slowed and the fundamental story could be improving for this new industry. The bullish divergence from the momentum study is a leading indicator that tells us that the bears are losing their grip. Wait for more of a base to develop.