HEXO Corp (HYYDF) has a few things going for it, and unlike TIlray (whose stock’s parabolic gain last week shot up as fast as it crashed back down before the weekend), HEXO’s stock price hasn’t quite reached such overvalued levels. HEXO is one of two cannabis growers who will be partnering with the Molson Coors Brewing Company to develop pot-infused beverages. With its current capacity to produce 108,000 kilos of cannabis per year, HEXO is zeroing in on securing a 35% market share of recreational cannabis in Quebec, in addition to capitalizing on its supply agreements in Ontario and British Columbia. Let’s take a look at its current price action.
Following a two-month trading range, we see HEXO breaking out upon the Molson Coors announcement in late August and its subsequent follow-through in early September (1). Having reached a swing high at (2) at the price of 6.87, we see it establishing a swing-low (3), rebounding off the 5.17 price level. Based on a strict price action model, an uptrend bias would have expected the following swing high to exceed the former, which it did at (4) but was rather muted. Following the sell-off, having reached a high of 7.02 on Sept 19, the three following sessions, comprised of “spinning tops” suggest indecision, and you can see the dwindling in volume supporting such market action. An uptrend bias would see price breaking above the current swing high, preferably not breaking below current support at 5.96.
Emerald Health Therapeutics (EMHTF):
Here we actually see a clear “symmetrical triangle” pattern for whatever that’s worth. Technically, a pattern breakout would signify a bullish or bearish bias depending on the direction of the breakout and the volume supporting such a move. Currently in the process of retrofitting its 1.1 million sq ft production facility, Emerald is positioned to take advantage of both the Canadian recreational market and global medical cannabis market. However, its lack of supply agreements (its only one with the British Columbia Liquor Distribution Branch) may stand in the way of allowing Emerald to compete for a larger share within its domestic market. The same can be said for Emerald’s global prospects.
The risk of loss in the trading of stocks, options, futures, forex, foreign equities, and bonds can be substantial and is not suitable for all investors. Trading on margin or the use of leverage is not suitable for all investors and losses exceeding your initial deposit is possible. Supporting documentation is available upon request. Trading futures, options on futures, and FX involves substantial risk of loss and is not suitable for all investors. Carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources and only risk capital should be used. Opinions, market data, and recommendations are subject to change at any time. The lower the margin used the higher the leverage and therefore increases your risk. Past performance is not necessarily indicative of future results.