The marijuana sector is going a little bit crazy! A countless number of companies are surging on the TSX, TSX-Venture, and CSE. I tried to reason with why the sudden surge and I can’t really think of a good reason for it. There was an announcement of a new US ETF (MJX) earlier this week, but is that enough to create such a big stir? Seeing that it’s largest position size on Cronos (MJN.V) was actually surprising and the stock price of Cronos surged massively. Unfortunately, I got shaken out of my position a few weeks ago and only kept 150 let-it-ride shares.
So with the massive gains, and no understanding why, it makes me a bit itchy to start reaching for the sell trigger. I like to lock in profits and reduce my initial capital exposure as much as I can.
Canopy Growth Corp (WEED.TO)
I really liked this trade. The consolidation and coiling in November set up for a textbook breakout over $22. I didn’t expect though it would be up to $30 so quickly. It’s stretching far outside of the 2-Std.Dev. bollinger band. With this kind of surge, I sometimes see this as an opportunity to lock profits and get back in on the pullback.
But I’m hesitating. Canopy is one of the market leaders and likely the company I would bet on to stay within the top 5 in the upcoming years. I would love to be able to maintain a solid portfolio of shares in this company and write covered calls.
So what is my plan? I think I’ll have to watch this closely to see if it does a gap up and run or if its a gap and sell. If there is some selling pressure I will take off some shares but no more than what would be considered let-it-ride shares.
I over-sold on my Aurora let-it-ride shares and sort of wish I didn’t.
Aurora Cannabis (ACB.TO)
As I mentioned in the previous section, I sold many of my ACB shares in the previous run-up, including my let-it-ride shares. I was expecting it to pull back further and thought it was way overextended, but the share price never did pull-back as far as I had hoped. I was also not a fan of all the drama between Aurora and its hostile take-over of Cannimed.
But the sector is rushing, the buyout looks like it might go through, and there were some key indicators in the charts that lured me back in to open a new position in Aurora. I ended up getting in on December 27 as volume was above the average and share price was breaking over the 1-stddev bollinger band.
The plan: I only bought 900 shares and will be watching closely to see if it stays over the breakout level. If it is a sharp pull-back below 8, I will likely close the trade.
Medreleaf Corp (LEAF.TO)
This was a new position that I opened on December 27th because it seemed like a forgotten member lagging behind the marijuana sector rush. I did a quick look to see if there was anything negative floating around the company, and I did not find anything. In general, the news behind this company is actually somewhat quiet.
The share price action and volume on the 27th was intriguing and the risk/reward was easy to price out. Since I don’t really know much about the company, I only opened a small position with a hard stop below $15.
Today, LEAF.TO saw an awesome breakout and I’ll be watching to see how this holds over $19. The end game for this trade is to just accumulate some free shares. Once I sense weakness, I’ll sell my initial capital and let the rest ride.
Dec. 26, 2017, Trade Reviews: TWTR and INTC
Twitter I’m still holding on to my let-it-ride option contracts on TWTR....