Medical Marijuana Inc Stock from a Technical Analyst Point of View
The purpose of this article is straightforward; as a technical analyst, I am going to provide my insights into Medical Marijuana Inc stock (OTCMKTS: MJNA), and I will do this by analyzing the company’s stock chart.
This is not going to be an easy task, given that this is a highly speculative penny stock, but, rest assured, I will do my best. Given the tools that I have available to me, I will provide a completely unbiased MJNA stock analysis.
I’m not going to lie, the MJNA stock forecast for 2017 does not look pretty, and the performance year-to-date is a testament to that. There is, however, a silver lining: if the right circumstances come together, a MJNA stock price target of $0.99 is not out of the question.
MJNA stock forecast 2017
Investors are coming to grips with marijuana being a prospective investment, due to its applications in both a medical and recreational environment. This is causing quite a stir in the investment community, and speculation is running rampant once again. A lot of companies stand to benefit from this new segment of the economy, while others are just trying to cash in on the hype.
Many of MNJA’s peers have staged an advance over the past few months, but Medical Marijuana Inc stock has failed to follow suit. Year-to-date, this investment is down 70.15%, and this doesn’t bode well going into year-end, given that tax loss season is on the horizon, which can exacerbate the selling.
It’s difficult to present a bullish case for Medical Marijuana Inc stock. In order to even suggest that higher MJNA stock prices are on the horizon, I would need the following indication on the stock chart to generate a bullish signal.
Chart courtesy of StockCharts.com
In order for an investment to stage an advance or decline, the applicable bullish or bearish momentum is required. This is why I am focusing on the moving average converge/divergence (MACD) indicator, which is located in the lower panel of the above medical marijuana stock chart.
MACD is a trend-following momentum indicator that uses the crossing of a signal line in order to distinguish whether bullish or bearish momentum is influencing the stock price. A bullish cross suggests that bullish momentum is influencing the trading action, while a bearish MACD cross suggests that bearish momentum is influencing the trading action.
The above medical marijuana stock chart illustrates that this is indeed a very influential indicator.
In July 2016, a bullish cross was generated and, in the months ahead, MJNA stock staged a bullish advance toward higher stock prices. This advance began at the low price of $0.04 and peaked at $0.268, which resulted in a potential gain of 523.26% while the bullish MACD signal was engaged.
In January, a bearish cross was generated, which indicated that bearish momentum was influencing the stock price. This bearish momentum has caused a bearish trend to develop, in which lower lows and lower highs dominate the landscape.
As long as this indication remains in bearish alignment, it continues to suggest that lower prices are on the horizon, because bearish momentum creates a path of least resistance that is geared toward lower prices.
An advance cannot occur until a bullish MACD cross is generated and, until then, I can only assume that lower prices are on the horizon for the remainder of 2017.
Should I Buy MJNA Stock?
Funny question to ask, after I just finished explaining how poor this investment has performed year-to-date, and that there is little evidence to currently suggest that higher stock prices are on the horizon.
Let’s not forget that I did mention a silver lining. This silver lining is predicated on the technical price pattern that is currently in development on the following MJNA stock chart.
Chart courtesy of StockCharts.com
The large technical price pattern that is highlighted on this Medical Marijuana Inc stock chart is a symmetrical triangle. This technical price pattern is among my favorites because it is very powerful and it is known for its explosive breakouts.
This triangle pattern is characterized by a series of higher lows and lower highs, and it is best identified by using two converging trend lines that are created by connecting the series of lower highs and higher lows. These converging trend lines act as levels of price support and resistance.
As the triangle develops, the range between support and resistance contracts. This contraction of space causes momentum to build within the pattern. When the stock price exits this pattern by breaking above resistance or below support, the momentum that was stored in the pattern is released and an explosive move is expected to follow.
If this pattern ever resolves itself in a bullish manner, it would essentially create the silver lining I speak of, and higher MJNA stock prices would prevail. The initial price objective would mark the point from which this pattern began its development, which is $0.99.
The problem is that I still did not answer the question of whether I would buy MJNA stock today. In all honestly, at the current juncture, I would not. This investment is relatively weak compared to its peers (which is never a good sign), and it continues to drift lower, unable to generate a bullish signal.
If I was inclined to trade Medical Marijuana Inc, I would tactically wait for support—outlined by the symmetrical triangle—to be tested before I would even think of assuming a position. This level currently sits at $0.045 and, given that the trend line has acted like an influential level of price support on more than a few occasions, I can only assume that it will once again.
Waiting for support to be tested lowers the inherent risk associated with this investment, and it also preaches discipline.
I’m not impressed with the price action on the Medical Marijuana Inc stock chart. This investment has failed to rally when its peers have done so, which means it is inherently weak. There is little to suggest that this will change anytime soon.
There is a glimmer of hope in a silver lining, which is predicated on a very large technical price pattern that is currently in development. This pattern provides hope, but I would not use it as a reason to enter into a position at this current juncture.
MJNA is a highly speculative penny stock, and I would only recommend it to savvy investors who are disciplined in managing risk.