MYMMF Stock: Waiting on a Confirming Signal
The world is slowly starting to embrace marijuana legalization, and Canada is currently leading that charge. Later this year, marijuana is going to become legal on a federal level, making it a recreational substance just like alcohol.
This is big news, a landmark event that will reshape history, and it is causing quite a frenzy with retail investors. Retail investors are a manic bunch, which is why this sector has experienced such drastic highs and lows over the past couple of years.
2017 was an incredible year for this sector, but the same cannot be said about this year. Since January 2018, this sector has been within the grips of a painful correction. For instance, Mym Nutraceuticals Inc (OTCMKTS:MYMMF, CNSX:MYM) stock is currently down 62.5% from its peak.
Let’s not dwell too much on the past, because there is a silver lining. Things in this sector are starting to look up. A number of marijuana stocks have already begun to turn, as investors are once again eager to bid up this sector in anticipation of legalization.
Like some of its peers, there are already signs suggesting that the correction in MYMMF stock has run its course, opening up the opportunity for a bullish trend to develop.
This sign I am referring to, which is suggesting that the correction has run its course, is a technical development. This technical development is highlighted on the following Mym Nutraceuticals stock chart.
Chart courtesy of StockCharts.com
This chart illustrates the correction that MYMMF stock has been in since December 21, 2017, after it peaked at $4.00. This correction has been characterized by a progressive move toward lower prices, consisting of a series of lower highs and lower lows, which is the quintessential characteristic of a bearish trend.
Capturing this correction was achieved by using a simple downtrend line. This line was produced by connecting the peaks that were created by the lower highs that characterize the correction.
The downtrend line defined where price resistance resided. This was very important information because, as long as MYMMF stock was trading below the downtrend line, I could only assume that the correction was still in development and that lower prices were likely to prevail.
In order to negate the implications suggested by the downtrend line, Mym Nutraceuticals stock needed to break above it.
This is exactly what occurred on June 6, 2018. This event is suggesting that the correction that began in December has run its course and that, therefore, an opportunity for a bullish trend to follow has arrived.
In order to confirm that a bullish trend is in development, I will require a bullish signal from the influential momentum indicator highlighted on the following chart.
Chart courtesy of StockCharts.com
The influential momentum indicator located in the lower panel of the stock chart is the moving average convergence/divergence (MACD) indicator.
MACD is trend-following momentum indicator that uses the crossing of a signal line to determine if bullish or bearish momentum is influencing the price action in a stock.
Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices.
This is very pertinent information because a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it.
For instance, in October 2017, a bullish MACD signal was generated, and it was the precursor to the monstrous run that saw Mym Nutraceuticals stock appreciate by almost 852.4% in seven weeks.
In January 2018, a bearish signal was generated, which confirmed that a correction was in development. Since then, lower prices have prevailed.
The MACD indicator is currently in bearish alignment, supporting the notion that MYMMF stock is still geared toward lower prices.
In order to negate the bearish implications suggested by this signal, Mym Nutraceuticals stock needs to generate a bullish MACD cross. The good news is that the signal lines that created this signal are currently converging, and a bullish MACD signal can be created in the weeks ahead.
Once this event unfolds, I will have the indications necessary to suggest that the stock is primed to make a sustained move toward higher prices.
One indication suggesting that the correction that began in December 2017 has run its course has been generated on the Mym Nutraceuticals stock chart.
In order to confirm that a bullish trend is in development, I am waiting for a bullish MACD signal. Until that event unfolds, I am neutral on MYMMF stock.