UPDATE: Buy the previous 'don't touch' marijuana stock and sell the darling
By Nigam Arora
A tale of two marijuana stocks --
(This story was originally published Jan. 10.)
When I first wrote that some investors will make millions in marijuana but many more will lose their shirt, investors had difficulty understanding.
After all, many thought that if marijuana was going to be big, all they had to do was buy a couple of stocks and hold them forever. Now that many investors have experienced volatility in marijuana stocks, and I have published a large number of successful marijuana trades, investors who were previously criticizing me are beginning to understand that it takes knowledge, skill and the proper mindset to make money in marijuana stocks.
When I wrote "How to potentially become a marijuana millionaire, albeit carefully (http://www.marketwatch.com/story/how-to-potentially-become-a-marijuana-millionaire-albeit-carefully-2018-08-27)," the most important word in the headline was "carefully." Let us explore with the help of a chart as to how a previous "don't touch" marijuana stock became a buy.
Please click here (https://thearorareport.com/chart-analysis-of-marijuana-stock-aphria-apha) for an annotated chart of
-- The chart shows when the Arora buy signal was given. Using the Arora Trade Management Guidelines, the average buy price was $4.21. Hindsight shows that the buy signal was given close to the bottom.
-- The position now has a 60% gain in a short time.
-- The chart shows that during the time when there was a lot of bullishness about
-- When rumors surfaced that Marlboro maker Altria (MO) would buy
-- Interestingly, The Arora Report made a call to buy marijuana stock Cronos (CRON.T) just before it received a major investment from cigarette maker Altria. This call produced large gains in a very short time.
-- The chart shows that a short-seller report about fraud at
-- The chart shows that, at the time of the Arora buy signal, sentiment on
-- The chart shows that at the time of Arora buy signal, RSI (relative strength indicator) was oversold. In contrast, RSI is now overbought.
-- The chart shows that at the time of The Arora Report buy signal, RSI was showing a positive divergence. In contrast, RSI is now showing a negative divergence.
-- The chart shows that at the time of the Arora buy signal, volume was very heavy. This indicated that the bottom was most likely in.
-- The chart shows a hostile bid by Green Growth Brands .
The foregoing highlights that
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If you could buy only one marijuana stock
The fact that I am highlighting
As of this writing,
Sell (or avoid) the darling
Even though there is fair probability of
Gain an edge
Segmented money flows have an excellent record in giving investors an edge in all kinds of stocks, not only marijuana stocks. I do credit segmented money flows, in large part, to The Arora Report success in calling moves in various marijuana stocks. To learn about segmented money flows, please see "How 'peak good news' for marijuana stocks may undermine investors (http://www.marketwatch.com/story/how-peak-good-news-for-marijuana-stocks-may-undermine-investors-2018-11-08)." Please click here (https://thearorareport.com/chart-money-flows-cannabis-stocks-11082018) for a previously published chart of segmented money flows on 15 marijuana stocks including Aurora Cannabis (ACB.T), New Age Beverages (NBEV), Constellation Brands (STZ) and marijuana ETF (MJ).
Please also read:
To invest successfully in marijuana stocks, avoid this one thing (http://www.marketwatch.com/story/to-invest-successfully-in-marijuana-stocks-add-this-pointer-to-your-list-of-things-to-do-2018-10-09)
How to survive marijuana stocks' rollercoaster ride (http://www.marketwatch.com/story/how-to-survive-marijuana-stocks-rollercoaster-ride-2018-09-24)
Seven reasons Big Tobacco is likely to make a move on the marijuana industry (http://www.marketwatch.com/story/seven-reasons-why-big-tobacco-is-likely-to-make-a-move-on-the-marijuana-industry-2018-09-10)
Marijuana beverages are the new thing, but investors should only take sips (http://www.marketwatch.com/story/marijuana-beverages-are-the-new-thing-but-investors-should-only-take-sips-2018-10-02)
Disclosure: Subscribers to The Arora Report (http://thearorareport.com/) may have positions in the securities mentioned in this article or may take positions at any time. Nigam Arora is an investor, engineer and nuclear physicist by background who has founded two Inc. 500 fastest-growing companies. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com (mailto:Nigam@TheAroraReport.com).
-Nigam Arora; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 11, 2019 16:43 ET (21:43 GMT)
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