How to Position Smartly in ACB Stock

For would-be Aurora Cannabis (NYSE:ACB) bulls intent not to get drawn-in and smoked in a promising secular market trend, the suggestion remains the same. Don’t fix what isn’t broken and stick with the ACB stock price chart rather than outside influences. Let me explain:

How to Position Smartly in Aurora Cannabis Stock
Source: Shutterstock
It has been a month since cautiously writing about ACB stock and putting the cannabis producer on the radar for purchase. But similar to an even earlier discussion of Aurora, action was specific to the price chart. And on each occasion, shares of Aurora Cannabis failed to deliver a “show me the money” signal worth buying into. Thank you, ACB stock.

With ACB stock down another 17% and over 50% removed from last October’s all-time-high, is it finally time to look past Aurora’s larger-than-expected loss and reduced Q4 revenue guidance delivered in May? Shouldn’t investors support the long game in ACB stock as Canada’s second-largest recreational and medical player? Maybe.

Given the decline in ACB stock, doesn’t it now make more sense than ever to embrace Aurora Cannabis as a recognized global leader via the company’s aggressive acquisition strategy and licensing wins? Again, it’s certainly worth thinking about.

The truth of the matter is, it’s wholly acceptable to buck price weakness and sour sentiment in favor of a promising longer-term investment. And this isn’t just advice for ACB stock. Even Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) investors are asking those questions right now.

But if the investment in question is ACB stock, you’d be in good company too. Jim Simmons’ Renaissance Technologies hedge fund certainly believes in the ACB stock story. Per 13F filings, the famed quant fund has purchased nearly 1.70 million shares over the past two quarters. The fund has also built a smaller position of around 240,000 shares in cannabis peer Aphria (NYSE:APHA).

It’s good information, but rather than simply get drawn in to Aurora by outside influences, albeit prominent ones, it’s also nice to know the ACB stock price chart also supports this investment proposition in today’s market.

ACB Stock Weekly Chart

Source: Charts by TradingView

There’s always the chance of failure when it comes to investments in risk assets like stocks. Right now though, using a solid-looking opportunity on Aurora’s price chart in conjunction with an above-the-market buy order and adherence to a technical stop-loss can avoid much larger regrets within one’s portfolio.

Currently shares of ACB are in a testing position of channel and Fibonacci support backed by the 62% retracement level. I’ve used 2017’s low and that same year’s massive breakout in the design of this key support area near $5.50. Also supportive, ACB stock is oversold and generated a stochastics crossover signal a couple weeks ago.

My advice today is a familiar approach when it comes to buying ACB stock. I’d recommend investors put Aurora on the radar for purchase if last week’s pivot low can hold support, and confirm a bottoming candlestick is in place. It’s that simple.

Using an entry above $6.75 and setting a stop 10 cents beneath the candle amounts to dollar risk of $1.20 for the position. Size the position accordingly and in return for that exposure, I’d set a price target of $9.75 – $10.50 for taking partial profits which looks sensible off and on the price chart.

Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.

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