Tilray (NASDAQ:TLRY) has always been a big deal among cannabis stocks and recently TLRY stock has grown more impressive, except with Wall Street. And today that reeks of opportunity for buyers. Let’s check in with what’s happening off and on the price chart, then offer a risk-adjusted position to grow your trading account.
Canopy Growth (NASDAQ:CGC). Aurora Cannabis (NASDAQ:ACB). New Age Beverages (NASDAQ:NBEV). Sundial Growers (NASDAQ:SNDL) and many others. From the largest to the smallest, and for pot producers of all flavors, the past couple months have mostly proven a house of pain for investors.
On that front, Tilray shareholders can commiserate as a market leader, in the worst sort of way, with its peers. Three months after peaking at $67 in early February, shares were down as much as 80%. And today and nearly a month off its corrective low, shares are still off 75% from that relative high.
Issues Facing TLRY Stock
To be fair, Wall Street’s broader rotation out of higher multiple growth stories, which began in February, has barely loosened its grip. And I suppose TLRY, as well as other cannabis stocks, can empathize with others such as hard-hit SPACs. Churchill Capital (NYSE:CCIV). QuantumScape (NYSE:QS). Opendoor Technologies (NASDAQ:OPEN). There’s plenty of pain to go around.
But the smoking in TLRY shares still ranks among the best, in an ignominious sort of way. And behind that burden have been two other issues weighing on investors.
First, there’s the overhang Tilray felt alongside other pot stocks. Optimism over quick-to-happen federal legalization under a pot-friendly Biden administration faded with the president’s well-watched first 100 days failing to find agreeable political will for cannabis. And it’s an issue.
Bottom line, Tilray, and other Canadian pot companies, can’t retain their publicly traded status and market marijuana in the U.S. until there’s a change at the federal level.
Secondly, size does matter. But it’s also two-way street and a challenging one for TLRY these days.
In early May, Tilray closed its deal with Aphria making the combined company the largest global grow outfit on a pro forma sales basis. But a valuation of around $7 billion compounded by disappointing quarterly results apparently left many investors gaging.
TLRY Weekly Price Chart
Source: Charts by TradingView
Change in a beneficial sort of way is almost certain to happen as it relates to cannabis’ gridlock and sentiment surrounding TLRY’s place in the industry. And late last month, word of the House Judiciary Committee readying to reintroduce a bill for the federal legalization of marijuana did send TLRY stock higher.
What will tomorrow usher in? Cannabis cafes are still unlikely, of course. But shares of Tilray are leaving a fresh scent of growing profits on the weekly price chart.
And it’s one that looks worth sampling today.
Bottom Line on TLRY Stock
Technically, Tilray shares have confirmed a third bottoming attempt following two prior tries in March and April during the stock’s bear-market correction. Modest follow-through to start the month has TLRY about 4% to 5% above a double candlestick bottoming pattern.
For some, today’s Tilray share price may put it out of reach. But I’m upbeat it’s a buy. With stochastics bullishly aligned and only just starting to trend higher from oversold territory, I see a decent risk-to-reward proposition under the notion an uptrend will emerge during the second half of 2021.
Right now and to better prepare for a bullish price cycle in TRLY stock, protect against downside risk or even put traders in an advantaged position to accumulate on weakness through active management, a September $15/$35 collar smells like the color of money in our estimation.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.