TGIFF Stock: Testing an Important Price Metric
A violent sell-off struck the markets in late January. Investors got so used to a market that only appreciated that this move toward lower prices was a real eye-opener. Fear-induced sell-offs like this one never last and, as expected, it didn’t take long for the markets to find their footing and stage an advance. This, of course, would be glorious news, but there is one glaring highly speculative sector that has failed to follow suit, and it continues to drift lower.
The sector I speak of is the marijuana stocks; the high-flying nature that characterized this sector late last year has been absent as of late. I am just going to assume the correction is well-warranted because the speculative run that preceded it was quite astonishing. Therefore, quite a bit of corrective price action is required to alleviate the overbought conditions that were created in order to restore health to the trend.
Over the last number of weeks, I have been following Friday Night Inc (OTCMKTS:TGIFF, CNSX:TGIF) stock, watching and waiting for indications that would suggest that the current correction that has gripped Friday Night stock has finally run its course, allowing the TGIFF stock price to appreciate once again. These indications have yet to be generated, but this may soon change because a very important price metric has just been tested.
This important price metric is highlighted on the following Friday Night stock chart.
Chart courtesy of StockCharts.com
The price metric that was just tested is the 200-day moving average.
The 200-day moving average is an influential metric because it acts as a dividing line that separates stocks trading in a bull market from stocks trading in a bear market. Distinguishing between these two polar opposites it quite easy; all that is involved is determining whether the stock price is trading above or below the 200-day moving average. When the stock price is above the moving average, it is bullish. When the share price is below the moving average, it is bearish.
TGIFF stock broke above the 200-day moving average in November 2017, and it has been above it ever since. This bullish posturing suggested by the price metric is currently being put to a test. As long as Friday Night stock is trading above it, I can only assume that bullish implications will follow.
This is a good notion to carry because I have been saying for weeks now that the price action on the TGIFF stock chart has remained constructive and that I was waiting for a signal that I believe will suggest that the correction has finally run its course.
The constructive price action and the signal I speak of are highlighted on the following Friday Night stock chart.
Chart courtesy of StockCharts.com
This TGIFF stock chart has been annotated to highlight the moving average convergence/divergence (MACD) indicator and the wave structure responsible for creating constructive price action.
Constructive price action creates the building blocks responsible for sustaining a trend. These building blocks are an alternating wave structure consisting of impulse waves and consolidation waves.
The wave highlighted in green is the impulse wave. These waves are advancing in nature, and they capture the period in a bullish trend when a stock makes a sustained move toward higher prices.
The wave highlighted in purple is the consolidation wave. These waves are corrective in nature and they capture the period in a bullish trend when the stock price corrects and refrains from advancing. This is a very important wave because it creates the necessary conditions so an impulse wave can follow.
TGIFF stock is currently within the confines of a consolidation wave. This wave is in the form of a descending channel. A bullish resolution of this pattern—which would suggest that higher Friday Night stock prices are likely to follow—would involve breaking upward out of this channel. Such an event would most likely coincide with a bullish signal from the MACD indicator.
MACD is a trend-following indicator that uses the crossing of a signal line in order to distinguish whether bullish or bearish momentum is influencing a stock. This is influential information because a stock cannot sustain a move in either direction without the applicable momentum supporting it. As a result, the MACD indicator has an impressive track record of confirming which wave is in development.
In November 2017, a bullish MACD cross correctly suggested that an impulse wave was in development. In January 2018, a bearish MACD cross correctly suggested that a consolidation wave was in development.
Since mid-January, I have been watching the Friday Night stock chart, waiting for the MACD indicator to swing into bullish alignment. I believe that once such an event occurs, it will suggest that another impulse wave is likely to follow and, therefore, higher prices will once again prevail.
Thus far, this indicator has proven true to its nature and remains in bearish alignment as the TGIFF stock price continues to correct. If Friday Night stock can regain its footing and bounce off the 200-day moving average, a bullish MACD cross could act as the catalyst that finally turns this stock.
I have been waiting for a number of technical indications that would suggest that TGIF stock is once again primed for higher prices, but those signals have yet to be generated. Friday Night Stock has just tested its 200-day moving average, and in order to retain its bullish posturing, it must remain above this metric. This would retain the possibility that a move toward higher TGIFF stock prices is still in development.