CURLF Holds Key Weekly Support as Relative Strength Turns Up

 

Above is a weekly chart of CURLF, and the first thing I want to point out is that price appears to be holding moving average support. This isn’t some random moving average that I pulled out of a hat. It’s one I’ve been using for a long time because it has done a remarkably good job of defining both support and resistance over the past two years. Specifically, this is the 15-week simple moving average of the lows, and it continues to earn its keep.

If you study the chart closely, you’ll notice how often price has reacted to this average almost to the penny. When CURLF is above it, pullbacks into the average tend to attract buyers. When price is below it, rallies often stall right at that same level. That kind of consistency is significant to me because it tells me the market is paying attention to it, and when the market pays attention, I want to be paying attention too.

Last week was another good example. CURLF pulled back and tagged this 15-week moving average, but instead of breaking down, it held. We closed the week in positive territory and left behind a small bottoming tail. That tail tells me buyers stepped in at support and defended it. In a weak stock, that level would have given way. Here, it didn’t.

In the lower pane, you can see the relative strength line of CURLF versus MSOS. After a period of drifting lower, that ratio line now appears to be turning back up. Relative strength turning higher while price holds support is something I always want to see, as it suggests CURLF may be starting to outperform the broader cannabis space again.

I’ve been long CURLF for many months and have been content to sit through the consolidation. At this point, I’m not looking to add blindly. My plan is to let price confirm. On the daily chart, a move above 2.82 would take out the most recent pivot high and confirm a small double bottom that held support near 2.40. If price can clear that level, I’ll look to add to my position.

For now, the combination of moving average support and improving relative strength keeps CURLF firmly on my radar.

For more analysis and market insights, visit my homepage 

Six Weeks of Compression: Is Cannabis Setting Up for a Move?

 

It was another quiet week for cannabis stocks, but despite the lack of excitement, the group managed to do something constructive. We closed the week on the highs and finished in positive territory. That may not sound like much, but in a market like this, small details matter, especially when they keep repeating.

If you look at the weekly chart above of MSOS, you’ll notice something interesting. This marks the sixth consecutive week where price has closed in a very tight range between roughly 4.75 and 4.90. As I mentioned last week, this kind of action is a clear sign of compression. Volatility has dried up, price has gone quiet, and the market is coiling. From my experience, these periods don’t last forever. When they resolve, they tend to resolve with a directional move.

The longer price moves sideways, the more meaningful the eventual breakout tends to be. Right now, MSOS is doing exactly that, moving sideways frustrating both bulls and bears, and lulling most participants to sleep. That’s usually when conditions are being set for something larger.

Timing is also worth paying attention to. We now have just five trading days left until the end of January. With Pam Bondi expected to finalize cannabis rescheduling, that headline could drop at any time. In my opinion, that’s the potential spark the market has been waiting for. When expectations are low and positioning is light, it doesn’t take much to shift sentiment quickly.

While the broader group has been quiet, a few individual cannabis stocks tested support this past week and appear to be bouncing. That tells me sellers may be running out of urgency at these levels. I’m not seeing aggressive downside follow-through, and that’s another subtle but important clue.

For now, patience remains the name of the game. Compression, quiet price action, and low volatility often precede expansion. The question is whether this is the calm before the storm and if this is the week volatility finally expands. I’m positioned for that possibility and prepared for movement when it comes.

Are you?

For more analysis and market insights, visit my homepage 

Using the 13-Day Moving Average as a Roadmap in RDW

 

What a nice rally RDW has put together over the past couple of days. Above is a daily chart of RDW along with its 13 simple moving average of the lows. This is a moving average I’ve been writing about for weeks now, and it continues to work well for me. I like its responsiveness and more importantly the way price consistently reacts around it.

If you look back on the chart, you can see how clearly this moving average has acted as both support and resistance in the past. When price has been below it, rallies have often stalled there. When price has been above it, pullbacks into the average have tended to attract buyers. That kind of behavior is exactly what I want to see from a tool I’m using as a decision-making reference.

A few days ago, RDW once again tested this 13-day moving average of the lows. At the time, the stock was under pressure, but instead of breaking down, it found support right where I would expect it to. Since that test, we’ve seen a sharp and decisive rally, confirming that buyers were waiting at that level. When a stock respects support like that, it usually isn’t random, and it’s something I want to stay aligned with.

Now let’s look at the chart on the right, which is also a daily chart of RDW but zoomed out a bit more. Notice where price stopped on Friday, right at the prior gap fill. That gap fill represented a logical area of overhead supply and a natural spot to take profits. That’s exactly what happened, and I took some off the table into that strength.

That said, I’m still holding a small long position because I’m positioning for a potentially larger move. I’m not in a rush to add here, though. Price is currently a bit extended above the moving average, and I’d rather be patient. My plan is to look for a pullback as the moving average catches up to price. Once it does, I’ll be watching closely for signs of support and a potential long entry.

As long as RDW continues to respect this moving average, it remains my roadmap for managing this trade.

For more analysis and market insights, visit my homepage 

TSLA Holds Weekly Support While Relative Strength Hints at a Turn

 

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Above is a weekly chart of TSLA along with its moving average, and on the right we have a daily chart of TSLA with the relative strength line in the lower pane. I want to start with the weekly chart because it provides the bigger picture and, in my opinion, the most important context right now.

Notice how this simple moving average of the lows has acted as support for TSLA numerous times in the past. Each time the stock pulled back into this area, buyers stepped in and price rebounded higher. This moving average has clearly been respected over time, which is why it continues to matter. This past week we saw TSLA once again test that same average, and importantly, the stock managed to close the week in positive territory. That tells me support was respected yet again, and whenever that happens, it immediately has my attention. The market is telling us that buyers are still willing to defend this level.

Now let’s shift over to the daily chart on the right. From a pure price perspective, TSLA has been in a downtrend, making lower lows and lower highs. There’s no debating that. However, when I look beneath price at the relative strength line, I start to see something interesting developing. While price has continued to struggle, the ratio line has actually pushed to a higher high. That kind of divergence can sometimes be an early sign that downside momentum is waning and that a potential change in trend could be setting up.

That said, I don’t trade based on anticipation alone. Relative strength is a great clue, but price still has to confirm. Right now, TSLA remains below its most recent pivot high at 454.30. As long as price stays below that level, the downtrend is technically still intact. For me, the trigger would be a move above that pivot. If TSLA can take out 454.30, that would suggest a higher high is finally in place and that some kind of intermediate bottom may have formed.

If that happens, I would expect higher prices in the weeks ahead. Until then, patience is key. I’ll be watching closely to see if price can confirm what relative strength is already hinting at. Let’s see how things play out next week.

For more analysis and market insights, visit my homepage 

Relative Weakness in NFLX Persists

 

The relative weakness in NFLX continues to stand out, and today was another good example of why I’ve stayed cautious with this stock. While the SPY pushed higher and made a new high on the day, NFLX closed lower. That type of divergence is exactly what I pay attention to. Above is the daily chart of NFLX, and in the lower pane I have the SPY for comparison. When the broader market is moving up and an individual stock can’t keep pace, that’s often a warning sign.

I’ve been talking about this relative weakness since early December. Back then, the market was still in a strong uptrend, but NFLX was already starting to lag. On December 4th, I laid out why I was bearish and why the action in NFLX was something investors shouldn’t ignore. Since that time, we’ve seen the stock sell off, confirming that early warning. Relative weakness doesn’t always play out immediately, but when it persists, it usually matters.

Now we’re back at another interesting spot on the chart, and in my view, another potential setup for a short. Today NFLX printed an inside day, meaning the entire trading range stayed within yesterday’s range. On its own, an inside day can mean consolidation, but context is everything. The key is that this happened while the S&P 500 made a higher high today. To me, that’s another clear sign that NFLX is underperforming and that sellers are still in control.

The level I’ll be watching very closely is yesterday’s low at 81.93. That low also happens to be the earnings day low, which makes it even more important. If that level gives way, I think we could see some further downside unfold fairly quickly. As long as NFLX continues to lag the market and fails to show any real relative strength, I remain skeptical of the upside.

For anyone who wants more background on why I turned bearish in the first place, I’d recommend going back and reading my original post from December 4th, Relative Weakness in NFLX You Can’t Ignore.