Aurora Cannabis (NYSE:ACB) doesn’t need a headline-grabbing, fear-inducing new virus to drive share prices into the toilet. It can do that on its own, thank you very much.
At $1.31, Aurora stock is now the cheapest stock on my watchlist. It’s an unenviable position to be sure, and speaks to just how low this once high-flying pot stock has gone. If you’ve come here in search of good news, run away now.
I’m a chart reader; a price-follower schooled in the dark arts of technical analysis. Sometimes the weight of the evidence reveals buyers are dominating. Other times the clues say bears are on a rampage.
As for Aurora’s stock chart, well, it continues to suggest the struggling cannabis company bought a one-way ticket on the graveyard train.
While I’m more than happy to change my tune if the chart warrants it, I see zero evidence why we should bottom fish here.
Aurora Stock Chart
The weekly view reveals a rise and fall that could borrow Bilbo Baggins’ memoir title —There and Back Again. From its humble beginnings as a penny stock, ACB rose ten-fold during the pot stock frenzy of late 2017/early 2018. The stock carved out a massive trading range between $5 and $10 for eighteen months before reality finally set in. The earnings and revenue failed to live up to the hype, and its steady dismantling began in earnest last year.
We’ve since traveled back from $10 to $1 in less than twelve months. A 90% slide is enough to shake out even the strongest of hands, the most ardent of fans. I see zero evidence of a turnaround — no classic bottoming formation like a double bottom or inverted head and shoulders.
The only positive development in the weekly time frame is that momentum has slowed. But this was inevitable after such a crash. With zero fast approaching, there simply isn’t much room for acceleration. We’re too close to the lower bound.
The daily chart reveals a low base pattern on the brink of breaking support. After carving out a new 52-week low last week, ACB has spent the past five days consolidating. Thursday’s drop ushered Aurora to the lower end of the base and places the stock one well-placed banana peel away from a breakout.
If past downswings are any indication, the stock could push toward $1 and below on this move.
Not to be a Downer…
I hate to pile on for the few remaining bulls out there, but even if ACB were to score a rebound, there are so many overhead resistance zones that we would need an epic change in the fundamental outlook for Aurora to right the ship at this point. The stock is full of underwater longs desperate to sell into strength so they can recoup losses.
While I’d typically recommend shorting such a bearish-leaning stock, ACB is likely hard-to-borrow with most brokers. Plus, at $1.31, the risk versus reward isn’t near as attractive as it once was.
Bottom line: Steer clear of Aurora stock. If you’re a bottom fisher, cast your lines elsewhere.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. For a free trial to the best trading community on the planet and Tyler’s current home, click here!
