For his second "Executive Decision" segment of Mad Money Thursday evening, Jim Cramer checked back in with Darren Lampert, CEO of GrowGeneration (GRWG) , the hydroponics retailer that just posted 63% revenue growth for the year.
Lampert explained that GrowGeneration sells technology and solutions for the cannabis industry and controlled-environment agriculture products are not something you can find at your local home improvement center. The company only operates in eight states, which means there are still plenty of places left to build.
Lampert noted that cannabis is growing faster than the wine and spirits market and as legalization grows across the country, that will only continue.
We looked at the charts of GRWG on March 22 ahead of earnings. We recommended then that, "Traders should be patient buyers of GRWG. Wait for a dip towards $50 risking to $47. The $100 area is our price target for later in 2021." Traders got the dip to $50 but have since been stopped out with a small loss.
Let's see how the charts look now.
In the updated daily bar chart of GRWG, below, we can see that the shares pulled back deeper than I anticipated. GRWG has closed below the flat 50-day moving average line.
The On-Balance-Volume (OBV) line looks like it has turned lower and the Moving Average Convergence Divergence (MACD) oscillator has made its way back to the zero line from below.
In the weekly Japanese candlestick chart of GRWG, below, we see that the two most recent candles are a large bearish engulfing pattern. The pattern still needs confirmation this coming week but it does give us pause.
The weekly OBV line is pointed down and so is the MACD oscillator. Both of these signals are not what the bulls want to see.
In this daily Point and Figure of GRWG, below, the software is "reading" the chart as distribution (selling) and is projecting a potential downside price target in the $27 area.
In this weekly close only Point and Figure chart, below, we used a traditional even-dollar scaling. Here the chart suggests the $24 area as a price target.
Bottom-line strategy: It seems like the fundamental story and the technical story are not on the same page. I like it when things work together. It gives me greater confidence. I would stand aside from GRWG for now.