Gettin’ Dirty with Growgeneration Corp $GRWG. (October 08, 2020)


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This is Scott with your Chart of the Day. I want to take a look at GrowGeneration Corp. ( NASDAQ: GRWG ). Last night, during the vice presidential debate, Kamala Harris talked about her and Joe Biden’s plan to decriminalize marijuana in the United States. Now let me tell you, pot stocks reacted to that.

Here’s Canopy Growth ( NYSE: CGC ); a monster move today, 13 percent on the day, not a bad move at all. Aphria ( TSE: APHA ) also had a nice move. Tilray ( NASDAQ: TLRY ) had a nice move. Now, here’s the thing about these stocks though, these are ugly daily charts and daily charts that have been in significant downtrends. For me, I like to trade stocks that are above all the major moving averages so I don’t like to really focus on these for anymore than short-term trades.

I’m a swing trader so for a swing trader I like GRWG ( NASDAQ: GRWG ) because this stock is above all of the major moving averages. It is not super-extended like Canopy Growth ( NYSE: CGC ) right now and it has a nice daily base of consolidation. You can see how we have had really nice tight price action. The Bollinger Bands are pinching together; we have a rising 50-day moving average and a nice pick up in volume the last couple of days.

Now today and yesterday GRWG ( NASDAQ: GRWG ) kind of gave us a decent level of resistance right there just above 18.40. So you can see how 18.40 is a clearly defined level of resistance. So what I want to see from this stock is a move above 18.40 on volume and potentially, a retest of the high from back here in August. Even if we just get to that high in August that’s like a 25 percent move; I will take that first swing trade.

Here on the weekly chart, if I flip over you can see how we are making a new weekly high. We broke above previous weekly resistance, and again, did it on a nice pickup in volume. I like the swing trade setup here on GRWG ( NASDAQ: GRWG ). It is a way to expose yourself to the cannabis sector without worrying about individual grower risk.

When you think about a gold rush; who makes the money during a gold rush? Is it the people who are actually digging for the gold or is it the people selling the picks and shovels? If you ask IIPR ( NYSE: IIPR ), I’d say picks and shovels look pretty good. IIPR ( NYSE: IIPR ) is a cannabis REIT; it has been a monster all year long. Even now, this is a great setup; nice tight Bollinger Bands, rising 50-day moving average. It moved up today but that is technically a higher low. So you could look to get into this above 132.70, I like your chances on this.

So keep an eye on GrowGeneration ( NASDAQ: GRWG ) and IIPR ( NYSE: IIPR ). Those are 2 ways to play the cannabis sector without being too exposed to individual growers; who, a lot of which are still not making too much money right now.

Meanwhile, you look at GrowGeneration ( NASDAQ: GRWG ) and here on a MarketSmith chart you can see how this company, look at these earnings, 123 percent, 152 percent, 180 percent, these are monster numbers. I like this setup and I like the fundamentals on GrowGeneration ( NASDAQ: GRWG ). So keep it on your watch list, maybe have an alert at around 18.40; I know I will be watching it tomorrow.

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