Following continued weakness in Aurora Cannabis (NYSE:ACB), is now a good time to finally invest in shares? Let’s take a look at what’s happening off and on the price chart of Aurora Cannabis stock and prescribe a plan of attack.
It has been a tough month for ACB stock since I last wrote about the Canadian-based cannabis producer at InvestorPlace. Earnings delivered weaker-than-forecast sales on already trimmed down revenues. The earnings confessional also included a loss of $8.9 million for the fourth quarter. Aurora Cannabis stock’s management further backtracked, becoming increasingly less transparent with its prior specific road-map for reaching profitability.
The net result in an already difficult cannabis market plagued by oversupply, rising costs, and lower margins was enough to send ACB stock down an immediate 9.23%. It also tumbled 23% to year-to-date lows over the last several sessions since the quarterly release.
Still, with Aurora Cannabis stock now off 51% from its March high and 60% beneath its October 2018 all-time high, is it finally time to take a contrarian nibble in Canada’s second-largest cannabis play behind Canopy Growth (NYSE:CGC)? In my view, the answer is best approached using the weekly ACB stock price chart.
Aurora Cannabis Stock Weekly Chart
The truth is, many of today’s and history’s best investments had their share of periods filled with doubt. Investors have to look no further than technology stocks and industry titans like Microsoft (NASDAQ:MSFT) or Amazon (NASDAQ:AMZN), as overzealous expectations turned venomous during the Dot.com crash to realize the cannabis market and ACB stock price could be going through a similar sort of transition.
But I don’t see the worst as being over for Aurora Cannabis stock. I’d proffer it’s best to wait at this juncture before looking to purchase shares, even if the strategy is based on accumulating ACB shares on weakness.
Technically, the latest decline in ACB stock price has broken key channel and Fibonacci support. Admittedly, the prior testing previously had this strategist window shopping for an entry, but managing to keep out of harm’s way over the past couple months on more than one occasion.
Now and with those critical supports failing, Aurora Cannabis stock is at increased risk of challenging not only its December low near $4.50, but also a test of $4.00 which holds the August 2018 bottom, 76% retracement level and 200-week simple moving average. ACB stock has grown increasingly prone to continued downside in its share price.
That’s not to say a bottom couldn’t suddenly evolve near current levels over the next week or so. And stochastics move out of oversold territory could always help with that sort of possibility. But I’m unconvinced.
Bottom-line, the technical laws for Aurora Cannabis stock bottoming right here and right now aren’t written in stone or in science textbooks. Nevertheless, it’s my view ACB is one cannabis stock where bucking the bearish trend in motion doesn’t look prudent.
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.
