Charlotte’s Web Stock: This Hemp Company Is Inches Away From Lift-Off

CWEB Stock: Is This the Beginning of a Spectacular Move Toward Higher Stock Prices?
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CWEB Stock: Is This the Beginning of a Spectacular Move Toward Higher Stock Prices?

In 2019, the stock market has taken on a new attitude. The fear and the selling pressure that gripped the stock market late in 2018 has completely dissipated and a buying spree has taken its place.

The rally has been fruitful for those who were brave enough to buy at year-end, but the sustainability of this stock market rally needs to be questioned because there are still too many outstanding issues that need to be resolved.

This is why it is especially important to focus on stocks and sectors that are positioned for gains, even in the face of a bear market. For example, marijuana stocks have become a favorite among retail investors, and for good reason: the negative stigma and laws prohibiting this plant are starting to crumble.

For instance, in the passing of the 2018 Farm Bill, hemp was legalized at the federal level. With it came the provisions for its cultivation, transport, and sale.

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This is big news for companies like Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF, CNSX:CWEB) because they produce and distribute hemp-based cannabinoid wellness products.

Legalization of hemp has opened the door for this company to sell their products nationwide. This will ultimately boost their top and bottom lines because their consumer base is expected to increase exponentially.

This was one of the main fundamental reasons why I currently like Charlotte’s Web stock. The reason why I chose to focus on at this exact moment is that the stock is on the cusp of a technical breakout.

CWEB stock is currently testing a very significant level of price resistance. This level is highlighted on the following stock chart:

Chart courtesy of StockCharts.com

The CWEB stock chart above illustrates that a significant level of price resistance resides at $18.50. This price point was first established as a level of price resistance on September 21, 2018. Since that fateful day, the stock has not been able to get above this price point.

There have been valiant attempts at breaking beyond this price point, but each time Charlotte’s Web stock hit $18.50, the stock got overwhelmed with selling pressure.

This level of price resistance is all that currently stands in the way of much higher stock prices, which is why this stock really needs to break above it.

Once the hurdle is cleared, I firmly believe that higher CWEB stock prices will follow. From a linear perspective, I could easily see this stock top $26.00 in very short order.

This price objective is not some arbitrary number I pulled out of thin air. I produced it by taking the depth below the significant level of price resistance and adding it to it.

This $26.00 price objective would only be the initial objective. The reason why I am stating this is that, once resistance is broken, the sky essentially becomes the limit. The reason is that once resistance is broken, there will no longer be a level of price resistance to contain the stock price.

The stock price will be making new all-time highs and trading in uncharted territory. There is no cap on how high the stock price can travel, especially if short covering comes into play, as investors will need to buy back the stock in order to cover their losing positions.

Not to mention, this is also the same setup that characterized the Tilray Inc (NASDAQ:TLRY) stock chart late last year. Once Tilray stock broke above its significant level of price resistance that resided at $30.00, it forged a new all-time high and, in turn, the stock went on a torrid run toward higher prices.

This went on for five weeks. When everything was said and done, the company’s valuation hit nosebleed levels and investors were graced with returns north of 900%.

I am sitting back, waiting for that fateful day when resistance is finally broken, because I believe that a spectacular move toward higher CWEB stock prices is likely. This is why it is important to keep an eye on Charlotte’s Web stock.

Analyst Take

Charlotte’s Web stock is currently testing a very significant level of price resistance that resides at $18.50.

Once this level is breached, there won’t be anything left to stop CWEB stock from advancing. Ultimately, it would unleash the potential for sky-high stock prices.