CGC: Is the Timing Finally Lining Up?

 

CGC… is it time? If you read my last post on MSOS, then you already know that the 50-day cycle is due this week. This is the same cycle I’ve been tracking and trading for a long time now, and when it kicks in, it rarely acts in isolation. Historically, it tends to lift the entire cannabis space, and CGC is no exception. Whether you love the company or hate it, this stock has a track record of moving hard when the timing lines up.

Just look at what CGC did at the last cyclical low back in November. From low to high, the stock doubled. Go back even further to last April and you’ll see a similar story, it doubled again. That’s not a coincidence, and it’s not something I’m ignoring. CGC may not always be a leader, but when the group catches a bid, it has a habit of responding in a big way. That’s exactly why I’m paying attention here.

From a technical standpoint, CGC is sitting in an interesting spot. The stock is currently at the bottom of an ascending channel that began back in March of last year. This channel has defined price action for nearly a year, and today it looks like CGC may finally be starting to bounce off that lower boundary. I’m not calling a confirmed bottom yet, but the location matters. When price is this stretched to the downside and lines up with a cyclical time window, my ears perk up.

What really caught my attention, though, is the ratio line of CGC versus MSOS. That ratio just broke above a downtrend line that has been in place since the spring of last year. Relative strength shifts like that often show up before price makes a meaningful move, not after. To me, that’s another piece of evidence suggesting that downside momentum may be fading and that CGC could be setting up for a turn.

Given that we’re now in the time window for a cyclical low and price is beginning to confirm the possibility of a bottom, I’m watching this very closely. I’m already long CGC, and I’ll be looking to add on a move over 1.20. That level would tell me that buyers are finally stepping in with some conviction.

Some of you may argue that CGC isn’t exactly the best cannabis company out there, and you may be right. But this trade isn’t about fundamentals, it’s about timing. When a rising tide comes in, it usually lifts all boats. If CGC does what it’s done in the past and doubles from here, I certainly won’t complain. From where I’m sitting, the risk-reward looks favorable.

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