Canopy Growth Corp. (CGC) is in the news today. They reported their fiscal Q4 results and also recorded impairment and restructuring charges of $743 million, the majority of which are non-cash charges. I will leave the fundamental analysis and numbers crunching to others but use this time to check on the charts and indicators.
In this daily bar chart of CGC, below, we can see that prices are lower so far today but let's try to focus on the bigger picture. Yes, prices failed to decisively clear the declining 200-day moving average line, but they are still above the rising 50-day moving average line.
The daily trading volume or turnover has been pretty active since November and the daily On-Balance-Volume (OBV) line looks like it has bottomed since November with the start of more aggressive buying this month.
The trend-following Moving Average Convergence Divergence (MACD) oscillator moved above the zero line last month for an outright go long signal.
In this weekly bar chart of CGC, below, we can see a number of positive developments. Prices are above the bottoming 40-week moving average line but today's close should put it below the line again.
The weekly OBV line has been rising since November and looks much more powerful than the daily OBV line. The MACD oscillator has turned up from a cover shorts buy signal and is heading back towards the zero line.
In this first Point and Figure chart of CGC, below, we used percentage changes for the plotting and here the chart shows a downside price target in the $13-$12 area.
In this second Point and Figure chart of CGC, below, we used the traditional even dollar increments for plotting and here this chart shows an upside price target in the $39-$40 area. The same data but a much different result.
Bottom line strategy: CGC might experience some weakness in the short-run but the bigger picture, in my opinion, is that it has been bottoming since October. It is hard to say when the base will be complete and prices will launch a new uptrend but things are looking positive. Put CGC on your potential shopping list and let's keep an eye on it.
