AmeriCann, Inc. (OTC: ACAN) is actually more a real estate company versus a cannabis company. They’re known for servicing the medical industries by creating state of the art facilities. To simply put it, they basically create high end grow warehouses for the wholesale distributor. Now if people are willing to buy into a company like Scotts Miracle-Gro Company (NYSE: SMG) as a direct play into the sector, then this company also has to be strongly considered.
One of the biggest advantages the stock has to offer is the low price point. This allows buyers/traders to somewhat leverage their positions, but also caps the downside risk versus upside reward. When I trade within this sector, the R:R (Reward to Risk Ratio) plays a major role in pursuing any trade opportunity. Couple that with price action, new inflow of volume and chart structure and I pursue this opportunity aggressively.
I am going to make my case for a buy side swing trade opportunity today. I do not care too much about the back end fundamentals unless it is current news that can sway the stock price one way or the other. I am trading this name, I am not investing nor suggesting it as an investment opportunity. Below I have a chart of ACAN on a hourly time frame. That means each bar/candle represents one traded hour. Today, we saw the stock open ABOVE a key resistance level and reject off the early lows. That is a bullish play when previous resistance becomes support. In my class today, I called a swing buy entry into ACAN at $3.25-3.00 with a stop placed at $2.70.
I highlighted the buy range for the stock with the ellipse and highlighted the volume bars below that show more inflow and trading activity than normal. The fact that the stock is up and holding shows buyers are active. The breakout bar shows the lows holding at the previous hourly highs. My short term expectations if support continues in the $4.10 – $4.00 range in the near term. It may max out near the $5.00 range if buying sustains. That will be a very critical price range for the stock. We may never see the double digit price range for this name, but a run to the $5.00 price range means a potential 50-60% move from current price levels. With spotty buying taking place in the sector, this is one name that is standing out today.
Now, if short term trading is not for you, then I would shy away from this trade idea. I love trading this sector because the rewards can come very quickly. I am never trying to “time” when to buy and sell. I always watch volume since volume is king. That reference just means whoever has more money than others, they will almost always win. Trading is based on market auction process. Think of it as supply and demand. I am seeing more demand lately in this name and it looks as if retail buyers are also trying to jump in. Maybe the volume dies out and buyers scramble to safety. However, I like the new inflow into the sector lately and I expect the risk off movement to subside sooner rather than later.
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