I Can’t Guarantee Another 1-Day 30% Mover, but…
Yesterday I wrote about a cannabis stock that was poised to pop, and it jumped 30% (yesterday, in just one day!).
If you read yesterday’s trade alert, then you know that there were a number of reasons to expect a big move on that day. News and technical conditions converged.
Today’s idea is another stock in the cannabis space that is sitting at an important technical level.
New Age Beverage (NBEV) describes itself in its press releases as, “the Colorado and Utah-based company intending to become the world’s leading healthy beverage and lifestyles company”.
While its product lines are not limited to cannabis-infused beverages, this is the product line that caused investors to drive the stock from under $2 to almost $10 in September of 2018.
After peaking at $10 it pulled back to a level you hear me frequently use in this newsletter, the 200-day moving average. This level provided the low of the correction at around $3.
That low was not surprising because, if you look at the chart below you’ll see that NBEV has traded very true to the technicals with respect to the 50 and 200-day moving averages.
With NBEV now sitting on its 50-day moving average, this provides a low-risk trade setup.
If NBEV closes over $6.50, this would indicate that the trend has held the 50-day moving average and has begun to resume its move higher.
A trade entered close to $6.50 has a good stop loss under $5.85.
This stock, and the cannabis industry reacts to unexpected news with very volatile moves. The way to play this environment is to find the technical points like this one that can provide good entry points with definable risks.
When it works, the trend will move away from your entry point and provide you with a profit in the trade before the next news event. This way you can trade through the volatile moves “with the market’s money” as traders like to say.
Rick Nartarian, Chief Investment Officer
The American Investor Daily