A caller during the Lightning Round of Jim Cramer's Mad Money program Monday night asked about Hexo Corp. (HEXO) : "Keep looking, but don't buy," was Cramer's reply. Let's see what the charts of this dried flower cannabis maker look like.
In the daily bar chart of HEXO, below, we can see a potential weak chart. Prices are below the declining 50-day moving average line and the flat 200-day line.
The daily On-Balance-Volume (OBV) line shows a decline from late April into August telling us that sellers of HEXO have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has been below the zero line since late May.
In the weekly bar chart of HEXO, below, we can see that prices made a strong rise from the middle of 2017 at around $1.00 to over $8 this year. Since early May prices have been cut in half and HEXO is below the declining 40-week moving average line.
The weekly OBV line is pointed down and the MACD oscillator is in bearish territory below the zero line but narrowing slightly.
In this Point and Figure chart of HEXO, below, we can see that prices have met a downside price target and probably need more sideways movement before a recovery rally can get underway.
Bottom-line strategy: Many cannabis names have seen impressive rallies in the past year or two and HEXO is one of those names. However, now after more than a 50% correction we get to see whether HEXO will be a long-term winner or a one-tune wonder. Let HEXO form a new base pattern before considering a long position.