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Yesterday was an excellent day for cannabis stocks.

Across the board, cannabis names experienced an impressive rise in volume and price.

I mentioned in The Trading Floor Mid Day Watch List yesterday that I was keeping an eye on the leaders: CRON, TLRY, and ACB, as they are often the most spoken about cannabis stocks online.

I thought that continued strength experienced across these stocks might lead to opportunities in low-priced cannabis stocks. I had my eyes on my scanners, looking for low-priced cannabis stocks popping up in sympathy to the overall sector strength.

All three of those stocks experienced a solid increase in volume and price yesterday.

As I have said before, when it comes to trading theme plays, such as this cannabis theme, often you will have leaders and sympathy plays. 

The leaders, in this case, are the large-cap cannabis stocks. The sympathy plays are the lesser-priced cannabis stocks that present substantial risk: reward opportunity but have fewer eyes on them.

If you would like a quick refresher on the sympathy plays, how to identify them, and what unique opportunities they present, then check out this article I wrote in September.

Before I go over the position that I entered, let’s take a quick look at how the leaders performed yesterday.

TLRY closed the day up 15.61% and saw volume increase almost 100% from the previous trading session.

CRON was arguably the most impressive out of the large-cap cannabis names as the stock closed up 25.66% yesterday, and volume was up over 100% from the previous trading session.

ACB also saw an uptick in price and volume as the stock broke above resistance and closed the day up 9.61%.

Yesterday I mentioned in The Trading Floor Chatroom and on the Mid Day Watch List that if the pot stocks continued to show strength, I might look to get long a particular sympathy play.

I had my eyes on a cannabis penny stock that was displaying strength, along with the sector, and I planned to look to position long if the strength continued into the close.

I was looking for the strength to continue not only in this penny stock but also in the overall sector, particularly CRON, TLRY, and ACB.

 

Auxly Cannabis Group (CBWTF)

CBWTF, according to otcmarkets.com, operates as a vertically integrated cannabis company.

 

Market Cap: 193M

Float: 758M

Outstanding Shares: 836M

 

CBWTF was on my Mid-Day Watch List as it appeared to be displaying relative strength in the sector, specifically when compared to other penny stock cannabis stocks.

Yesterday’s breakout above $0.20 signaled a consolidation breakout pattern on the daily chart and a higher time frame. The surge in volume led me to believe that this stock might experience momentum to the upside if the sector can remain strong.

Not only did I like how the stock was displaying relative strength to many other otc cannabis stocks, but I also liked the pattern that formed intraday.

I got long near the close at $0.2418, as the stock broke out of the consolidation breakout pattern.

I plan to hold for a target of $0.26 – $0.28.

 

Author:
Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

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