RDW Approaches Resistance as I Wait for a Better Entry

Above is a daily chart of RDW, and as you can see, the stock continues to trend higher, closing at 10.98 on an increase in volume. That’s exactly what you want to see when a stock is in an uptrend, higher prices being confirmed by expanding participation. Despite that strength, I’m staying patient here and resisting the urge to chase. With price moving closer to the $12 resistance area, the risk-reward no longer favors jumping in at these levels.

Instead, I’m focused on waiting for a constructive pullback. If you look closely at the chart, you’ll notice I have the 13 EMA of the lows plotted. This isn’t some random moving average I pulled out of a hat. Over the past couple of months, this average has done an excellent job capturing the short-term swings in RDW. In December, it provided near perfect support on the last two pullbacks, making it a level that clearly matters to the market.

Right now, that 13 EMA of the lows is approaching the $9 area, which also lines up with potential horizontal support. When multiple forms of support converge like that, it’s something I pay close attention to. That zone becomes a high interest area where I want to see how price behaves, not a place where I blindly buy.

My game plan is simple, I’m waiting for a pullback into the $9 area and then looking for confirmation before getting involved. That confirmation could come in the form of a trendline break on a lower timeframe, a bullish reversal candle, or some other clear sign that buyers are stepping back in. Until that happens, there’s no trade for me.

For now, RDW remains an important stock on my watchlist. Strong trends often reward patience, and I’m content to let the stock come to me rather than chasing it higher. Let’s see what next week brings

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Using Relative Strength to Find Your Trading Edge

 What is relative strength

Relative strength is a way of measuring how a stock is performing compared to something else, usually a broad market index like the S&P 500. Instead of focusing only on whether a stock is going up or down, relative strength asks a more important question: is this stock outperforming or underperforming the market? A stock can be rising in price, but if the market is rising faster, it is actually showing relative weakness. Conversely, a stock can be flat or even down slightly while still displaying relative strength if it’s holding up better than the broader market. Relative strength helps identify where money is flowing and which stocks are truly leading.

Why should we use relative strength

Using relative strength gives traders and investors a clear edge because it lets us focus on stocks that are actually outperforming the market. Rather than chasing price alone, we look at performance in context. A stock making new highs might seem strong, but if the broader market is moving higher faster, it’s relatively weak  and that can be a warning sign. By concentrating on stocks showing true relative strength, we align ourselves with where money is flowing, which often precedes sustained moves. This approach also helps us avoid weak stocks that may temporarily rise on hype but fail to keep pace with the market. Over time, consistently trading with relative strength increases the odds of being on the winning side of trends and reduces the risk of buying into underperformers. It’s a straightforward, discipline based tool that provides a measurable advantage in decision making.

What does relative strength look like

Relative strength becomes clear when we compare a stock’s price action to the broader market, such as the S&P 500 (SPY). Let’s look at an example with points A and B. At point A, the stock makes a low while SPY also makes a low. Later, at point B, the stock forms a higher low  meaning it doesn’t drop as much as it did before  while SPY makes a lower low, declining further. This divergence is a classic signal of relative strength. Even though the stock may still be moving down slightly, it is holding up better than the market. The higher low in the stock compared to the lower low in SPY shows that buyers are stepping in sooner and stronger, while the broader market is weaker. Identifying patterns like this consistently allows traders to spot leaders and laggards before price alone makes it obvious.

How the Ratio Line Reveals Relative Strength and Weakness

Another effective way to measure relative strength is by using a ratio line of a stock versus the SPY. A ratio line is simply the stock’s price divided by SPY, and it gives us a clear visual of performance relative to the overall market. When the ratio line is rising, it tells us that the stock is outperforming SPY, it’s gaining ground faster than the broader market. You can see this clearly on the left side of the chart, where the ratio line is trending higher alongside rising prices.

However, take a look at point A. Not only did the ratio line begin to trend lower, but it also broke its recent low before the stock itself did. This is an important observation because it signals that the stock is starting to underperform relative to the market, acting as a sort of leading indicator. The ratio line is giving us an early warning before price confirms the weakness. Sure enough, the stock eventually continued lower, confirming the underperformance that the ratio line had already highlighted. Using ratio lines in this way provides a real edge by showing relative strength or weakness ahead of price action.

Final Takeaway

Relative strength is a simple but powerful concept that can dramatically improve how you view the market. By comparing stocks to the broader market, you gain clarity on where true strength and weakness exist, rather than relying on price alone. Whether you’re analyzing higher lows, divergences, or ratio lines versus SPY, relative strength helps you identify leaders early and avoid laggards. Over time, consistently focusing on relative strength can provide a real edge by aligning you with institutional money flow. It won’t eliminate losses, but it does stack the odds in your favor. In the long run, trading and investing become less about prediction and more about consistently following strength.

If you want to see more examples of relative strength in action, you can find more analysis at 

The Relative Strength Trader

TLRY: Another Patience Test for Cannabis Traders

What a disappointing day in TLRY today. Coming into the session, I actually felt fairly constructive after earnings yesterday. The numbers themselves looked ok to me  maybe not great, but at least slightly positive  and the market initially seemed to agree. After-hours we saw an explosive move higher, followed by a period of consolidation, and then a slow, steady grind higher in the pre-market that pushed the stock as high as 10.45. That type of action usually gets my attention, especially in a sector that’s been starved for real momentum.

As you know, I’ve been watching the $10 area very closely and treating it as a clear line in the sand. If TLRY could open and hold above $10, I was interested in buying if the right setup presented itself. Below $10, I had no interest in forcing anything. Levels like that matter, particularly in names that can turn on a dime.

Unfortunately, the open couldn’t have gone much worse. We opened at 10.05, pushed to a quick high of 10.10, and then within the first minute the stock was already trading below 9.80. From there it was just a steady trend lower for the next 30 minutes, with sellers clearly in control. Once that initial damage was done, TLRY spent the rest of the day moving sideways and eventually closed on its low. After the promise shown pre-market, that type of follow-through or lack thereof  is incredibly frustrating.

Cannabis stocks really have a way of testing your patience. Just when it feels like there might be a spark that could ignite a meaningful move, the whole thing falls apart almost immediately.

One thing I do want to point out, though, is what’s happening around the earnings reaction. At point A on the chart is where earnings were released, and the explosive move higher from that area suggests a demand zone with unfilled orders. At point B, price came right back down into that same zone and, so far, appears to be holding. Because of that, heading into Monday, I want to see the 9.00 to 9.10 area hold as support.

Despite all of this, my broader view hasn’t changed. These stocks are volatile, headline driven, and often unforgiving in the short term, but I remain bullish on the cannabis sector over the long run. Days like today are aggravating, no doubt, but they don’t invalidate the bigger picture. For now, it’s about patience, discipline, and respecting levels even when the market does everything it can to test them.

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Why I Added More CGC Here

 

Today I picked up some more shares of CGC in anticipation of the entire cannabis sector moving higher in the weeks and months ahead. I’ve been watching this group closely, and today’s action in CGC stood out enough for me to add. When I look at the market through a relative strength lens, CGC was clearly the strongest cannabis stock on the day, showing relative strength from the open right into the close.

There are a few key things on this chart that really caught my attention. First, if you look at the daily chart, you’ll notice I’ve marked off a fairly reliable 37-day cycle that has been pulsating through this market for almost a year. What’s impressive is how accurate these cyclical lows have been. Time and again, price has been bottoming right around that window, and I pay close attention when cycles line up as cleanly as this. With today’s rally, I believe we have now confirmed the current cycle low, and it came right on schedule.

Volume also adds to the story. While it wasn’t explosive, we did see a modest increase in volume accompanying today’s green candle. That matters to me because it suggests participation is starting to expand. Even more important, today’s candle produced the largest close greater than-open relationship we’ve seen in the past 14 days. In other words, buyers stayed in control throughout the session and were willing to pay higher prices into the close. That’s often how early turns begin.

Another technical detail that shouldn’t be overlooked is the gap fill at 1.13 last week. Gaps tend to act like unfinished business, and seeing CGC come back and fill that gap before turning higher helps clean up the chart. 

When I put all of these factors together, relative strength versus the rest of the cannabis space, a cycle low arriving right on time, improving volume, a strong bullish candle, and a completed gap fill, it made sense for me to take action. This wasn’t about chasing strength; it was about positioning early as conditions start to improve. That combination is what led to my long entry in CGC, and now I’ll be watching closely to see if the broader cannabis sector and TLRY follow through.

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All Eyes on $10 After TLRY Earnings

Well, TLRY earnings are out and the stock is trading higher in the after-hours, and at least on the surface the numbers give the bulls something to work with. Tilray reported record Q2 net revenue of roughly $218 million, adjusted EBITDA of $8.4 million, and a net loss that improved by 49% to $43.5 million. Just as important, the company has now moved into a net cash position of nearly $30 million. Management also reaffirmed fiscal 2026 adjusted EBITDA guidance in the $62 to $72 million range, which adds a level of forward visibility that this group has been lacking for a long time.

A big driver of the quarter was international cannabis growth. Global cannabis revenue was up about 36% year over year and 51% sequentially, as Tilray continues to shift supply away from low-priced Canadian wholesale and into higher-margin European markets. Expansion of cultivation capacity, including a strong Cayuga outdoor harvest, clearly helped support that growth. This is the type of transition I like to see moving away from volume for volume’s sake and toward better margins.

The Tilray Pharma and beverage segments also deserve mention. The European pharmacy distribution business just posted its biggest quarter ever at approximately $85 million, and management is planning to triple its German medical cannabis footprint. On the beverage side, the craft beer category continues to face headwinds, but Tilray still managed to deliver $27 million in annualized cost savings and remains on track for its $33 million target under Project 420. That tells me management is at least staying disciplined on the cost front.

Yesterday I talked about my game plan and specifically about waiting to see if TLRY could break $10, and sure enough that was the exact high reached in after-hours trading. We still have roughly 90 minutes left in the after-hours session so anything can happen. Heading into tomorrow, the $10 level will be a key pivot for me after the open. If I see relative strength and increasing volume, that will help guide my decision on whether to add. For me, it really comes down to whether TLRY can finally push through and hold above $10. We’ll see what happens tomorrow.

For more analysis and market insights, visit my homepage