Buying Stocks In A Strong Sector That Haven’t Broken Out Yet: Cannabis Edition

Cannabis stocks are on fire after TWMJF led off as the first stock to break out.  A hot sector can provide a lot of trading opportunities.  Instead of chasing the leaders in a sector you can often buy laggard stocks that will get pulled higher by the large amount of money pouring into the sector.  This works especially well with commodity sectors where all companies in a sector essentially produce the same product.

OGRMF and SPRWF are two good examples of this as I fired off a tweet about these stocks earlier today.  I bought them both in anticipation they would follow the leaders in the sector higher.

With both stocks you can see clear resistance and support levels just like the leading cannabis stocks, but they hadn’t broken above resistance yet.  Both stocks had great volume today and OGRMF had a nice consolidation at the high end of the range leading into today’s breakout.

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The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Cannabis Stocks Break Out Of A Year Long Consolidation

The three main cannabis stocks that I follow exploded higher on massive volume increases over the past couple of weeks.  Not only that but their recent moves busted them out of a year long consolidation in a very bullish manner.  All three of these stocks were 5 to 6 baggers in 2016, and spent about a year consolidating those massive gains.

Canopy Growth shown below broke out above 10 and has done over 4x average weekly volume the past two weeks.

Aphria is breaking out of the former highs in the 6 to 7 area on over 2.5x average weekly volume the past two weeks.

Aurora Cannabis has had a volume explosion over the past week doing over 5x average volume and breaking out above 2.5.

It’s important to note these stocks are all major Canadian cannabis producers with over a billion dollar market cap.  There are many more speculative cannabis related stocks that are nothing more than management teams with plans and dreams that may or may not turn into anything.

I’m long APHQF and ACBFF as of this writing.  I plan on doing follow up posts on this sector as this appears to be a major breakout that could last a while.

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The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Semiconductor Shares Slammed After Earnings

Many semiconductor stocks have had a rough time after earnings.  AMD, UCTT, FORM, AEIS, and now RTR position NVMI have all been hit.

While NVMI is still in Stage 2 I’ve decided to close out my position in the stock tomorrow.  Fortunately I reduced position sizes in all of my stocks that had upcoming earnings.

This allowed me to take profits in stocks like NVMI and COHU ahead of earnings.  NVMI was up over 20% since I mentioned it in the first RTR.  I’ll take a small loss though on my remaining shares in NVMI unless it moves a little higher tomorrow.

I’m also going to close out COHU and INTT tomorrow.  They both have earnings after the close tomorrow, and based on the way other semiconductor shares have traded I’m not sure its worth the risk holding into earnings.  I have no idea how those stocks will trade after earnings, they could go up or down.  COHU I’ll take a small gain on and INTT I’ll be taking losses on.  INTT hasn’t traded well since it gapped higher and it has closed the gap since then, and it is about to fall below the gap support.

It’s certainly possible these stocks just consolidate and keep moving higher.  But since I have other trades that are working better (DAIO, TEAM, TWTR), I’d rather either add to those positions or find other setups without the overhead resistance that now exists in these semiconductor shares.  TEAM and DAIO especially are turning into monster winners, and TWTR is trading well so far the week after it surged higher.  It’s quite possible we are seeing a rotation out of semiconductor names after earnings which isn’t surprising since they have been performing so well.

Had I not taken any profits on the way up in NVMI I’d have nothing to show for it after holding for a couple months.  Which is another example of why I’m a big fan of taking partial profits off the table when you get them.  All of the positions I take in stocks I trade in increments, if a stock continues to go up I will increase my position size but also take a portion of the profits and reduce position size when I get them.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

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Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.