Warrior Trading Blog

Marijuana Stocks are Getting High! | Arsh’s Trade Recap

marijuana stocks

Hello, traders. My name is Arsh and I’m one of the trading mentors here in the Warrior Trading community. I wanted to quickly make this video for you guys to recap some of the amazing action we’ve seen on the cannabis stocks these last few days and weeks. I want to start off with TLRY which is a stock that has gone absolutely parabolic these last few days.

 

This is a stock that started off at roughly 20 dollars back when [inaudible 00:00:23] in July and now it’s trading for about 174 dollars. What’s really incredible is that it actually traded all the way up to 300 dollars just yesterday. Now, yesterday the stock actually gapped up 50 percent or so from the previous days close, so it closed the day around 1:55 and the following day it gapped up to 2:34.

Now, when I first saw this gap up I was really shocked to see just how much straight the stock have. When you see this type of gap up, you can expect to see some kind of fade into the gap potentially it move all the way to the other end of the gap which would be down here at 1:55. The stock was just so strong that it failed to move into that gap, and roughly around 10:30 is when this stock decided to curl higher.

Right around this time, I was actually feeling very bullish on TLRY. My thought process here was, this stock just gapped up 50 percent, it fail to fill this gap in and it’s already moving back towards the highs. That tells me that there’s significant buy pressure on the stock and roughly around to 18:20 is when I decided to get long on the stock.

My expectation was that we would begin moving back towards the high of day which was around 2:35, and if we were able to do that then there was a good chance the stock was going to continue breaking out from there. With this type of action the fact that this stock on its daily chart has had such a parabolic run that tells me that there’s just so much buy pressure on the stock even after this immense gap up, and a lot of traders are able to see that and when they see this type of action that’s going to bring out a lot of traders to the long side.

Definitely, you can expect to see this type of move eventually get sold out, but during this period the stock was exhibiting quite a bit of strength and that’s what told me that the stock was ready to go higher. As the day progressed, we actually consolidated right around the highs of day in a bull flag like pattern. This was some great action to see because it told me that we’re pinned against the high of day and even with this red candle that tried to dip, we were immediately bought and we started making a move back towards the highs.

When I saw that I became very confident that the stock was likely going to continue higher and by the end of the day, we actually moved all the way up to 300 dollars. Eventually, the stock decided to sell out from that 300-dollar mark and we actually got halted here, so right around this point 260 dollars, the stock was halted because of the immense volatility it was exhibiting. It opened up around 2:40, tried to make the move higher, it filled the gap from the halt and then it started to move lower.

When I saw that action, I knew that it was likely going to sell-off from there because with the type of buy pressure the stock had and the fact that it was halted on the way down, the buy pressure had faded at this point and this was the moment that the sellers finally came out. The stock was once again halted right around 2:25 and resumed from the halt back here at 2:04.

It moved all the way down to 150 dollars before having a significant bounce back up to about 220 dollars or so, that I think that’s where it closed yesterday. This is an incredible trading day for this stock and I’m sure people on both sides start to make some incredible money on these moves here.

Now, this morning the stock actually try to make a move higher but failed to make that move and that’s what gave me the insight that after such a parabolic surge on the daily and the fact that yesterday we had topped out at 300 and had such a significant sell-off, that told me that I think TLRY is likely going to go down from here. Unfortunately, it didn’t get trade this to the short side but pretty much all day the stock has been fading.

Now, the stock could move higher from here but I do think that based on the action that we’ve seen these last few days, there’s a good chance that we have seen the top on TLRY. There was just so much momentum that fueled this trade and that momentum is really no longer there. That momentum was there when we were originally making this move to the upside with very little sellers coming out, but now that we had this halt on the way down that really brought out the sellers. Then when we crashed down to 150 you know that really did a lot to destroy the momentum behind the stock.

These next few days are going to be very interesting for TLRY, I do think that it’s probably going to head lower from here. If it does decide to hold on to these values here then it definitely could try and make it push back higher as well. Are we looking up for any critical technical patterns such as bull flag and bear flag patterns to help a potentially trade the stock. As you guys may know CDC is another cannabis stock that’s been very actively traded these last few days.

This one it was actually a very significant daily chart break out right above its 36 dollar previous all-time high. This was a level that we had tap into back here and then we found some resistance right around here as well, but then we had some news come out that a major corporation had taken a big stake in CDC and that’s what really ignited a huge run for these cannabis stocks.

Now, I do think that these stocks could potentially move higher from here but because of how much volatility there is behind these stocks, I’m not sure if it’s the best idea to try and trade this to the long side from here. It’s really going to be, I think it’s best to wait for some kind of technical patterns to form to give us the best insight into what may happen.

Now, I do want to point out something that happened with CDC just a few days ago. Roughly around this time, we saw huge sell volume coming to CDC and that was a great sign for a potential short. When you see this kind of sell volume come in to a stock and the stock fails to make any considerable move or a considerable bounce, then that can give you an insight that the stock is ready to move lower. When we saw this huge volume, I think I was feeling very, very shown CDC. I actually decided to short TLRY instead which unfortunately didn’t give us the same type of move that CDC gave us.

This one if I had grabbed the put options that I wanted to, they would have been up over 1500 percent on the following days gap down. I actually decided to short TLRY instead that day and we did gap down the following day but intraday, it did not have nearly the same sell pressure as CDC did that day. I was able to capture a little nice trade on this TLRY as it gap down and made a nice fade for the rest of the day, but as you guys know the stock did eventually retrace all of those losses and eventually began to move higher and practically went parabolic.

I’m not sure if it’s going to be the best time currently to try and trade these for long side. I think the best bet is really to wait for some kind of technical pattern to form that tells us that the stock is ready to move in a certain direction, such as this TLRY pattern that had formed here. This was a bullish momentum pattern that showed us that there was a lot of buy pressure on the stock even after this immense gap up, it failed to fill the gap and move back towards the highs of day.

When you see this type of curling action around in major pivot zone like this, then that’s a great technical pattern to try and trade long on, and that turned out to be a phenomenal trade for anybody who got involved there on these prices because the stock eventually moved all the way up to 300. That’s one of the patterns that I like to look for in the markets and I’m sure we’ll continue to see some great patterns develop on these stocks because they’re just so actively traded.

CRON has been another of the cannabis stocks that has went parabolic along with CDC and TLRY, but it definitely seems to have some relative weakness compared to the other two stocks. It’s one that I personally have not felt the desire to trade, whenever I have desire to trade any of the cannabis stocks it tends to be with CDC or TLRY.

Just want to quickly recap these stocks for you guys it’s going to be very interesting to see what happens from here on out and I’m sure these stocks will provide some great trading opportunities. If you’re not already a member of our chat room, make sure you join us. This is where we tend to share all of our trades live along with the rest of the community, so we hope to see you there in our chat room and have a great rest of your day.

Oh, hey. I didn’t see you there. While I was just working on the dream board for my next home run trade, hopefully it comes soon. Until then, make sure you subscribe to get e-mail alerts anytime I go live or upload new videos. Until then, happy surfing.