We looked at the charts and indicators of GrowGeneration (GRWG) around the middle of August, but the way the broader market has been moving lately a fresh review of this supplier of commercial hydroponic supplies and large-scale grow design seems to be in order.
On August 18 we wrote, "I would look for GRWG to trade higher in the months ahead. Traders looking to go long should wait for some sideways trading before probing the long side. Risk a close below $12 for now. Our Point and Figure target is $41."
In the updated daily Japanese candlestick chart of GRWG, below, we can see that prices spiked up into the $22-$24 area last month before correcting. Notice the upper shadow above $22? This is a sign that traders rejected prices above that level. Now over the past couple of weeks we can see lower shadows below $14 and this is a sign that traders are rejecting the lows.
Trading volume has been heavy. The On-Balance-Volume (OBV) line sprinted sharply higher in August as buyers became aggressive but it has only retraced half of the rise suggesting to me that a large part of the buying has stayed with their positions. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profits sell signal but it remains well above the zero line.
In the weekly Japanese candlestick chart of GRWG, below, we can see the sideways consolidation pattern/base pattern before the rapid rally in July and August. The weekly candles show that prices above $18 were rejected and that prices below $14 were also rejected. We might see some further sideways price action but a weekly close above $18 is likely to restart the uptrend.
The slope of the 40-week moving average line is positive. The weekly OBV line remains constructive and the MACD oscillator is bullish.
In this daily Point and Figure chart of GRWG, below, we can see that the software still interprets the price action as bullish and is not projecting a downside price target. A trade at $13, however, might weaken this picture.
In this weekly Point and Figure chart of GRWG, below, we can see a new higher price target of $59.
Bottom-line strategy: Same strategy as before: Traders looking to go long should wait for some sideways trading before probing the long side. Risk a close below $12 for now. Our updated longer-term price target is now the $59 area, up from $41.