N Stock: A Rising Tide Raises All Boats
On August 15, news broke that Constellation Brands, Inc. (NYSE:STZ) was increasing its ownership stake in Canopy Growth Corp (NYSE:CGC). This event set off a tidal wave of buying pressure directed at marijuana stocks that continues to resonate.
The moves occurring in this space are reminiscent of the ones we witnessed late last year when Constellation Brands first initiated its stake in Canopy Growth.
In light of this event and the repercussions associated with it, I am returning to focus on Namaste Technologies Inc (OTCMKTS:NXTTF, CVE:N).
My last report on Namaste Technologies was published on July 13, and it was titled “A Directional Move in Namaste Stock Is Now Imminent.”
In that report, I outlined that a technical price pattern was approaching completion. I stipulated that the direction that this pattern would be resolved in would dictate the next sustained move in N stock.
The technical price pattern I am referring to is highlighted on the following chart.
Chart courtesy of StockCharts.com
The technical price pattern captured on the above stock chart is a falling wedge.
A falling wedge is a technical price pattern characterized by a series of lower highs and lower lows. Connecting the peaks and troughs that were created by the price action is how I captured this pattern.
The two converging trend lines that captured the pattern are very important tools because they pinpoint where price support and price resistance reside. The pattern in question would only be resolved if Namaste stock broke above price resistance or below price resistance.
On August 10, N stock broke above price resistance, completing the pattern and suggesting that a sustained move toward higher Namaste share prices was on the horizon.
The move toward higher prices did not gain traction until after the news broke about Constellation Brands and Canopy Growth.
The move toward higher Namaste share prices that followed has created a number of technical indications that are currently supporting further gains.
These technical indications are highlighted on the following chart.
Chart courtesy of StockCharts.com
This Namaste stock chart has been annotated in order to highlight an alternating wave structure and a momentum indicator that have been known to create and sustain bullish trends.
The wave structure consists of impulse waves and consolidation waves.
The impulse waves are highlighted in green on the chart above. They capture the stage in a bullish trend when a stock stages a sustained move toward higher prices.
The consolidation wave is highlighted in purple, and it captures the stage in a bullish trend when a stock corrects.
The falling wedge is also referred to as a consolidation pattern, and its completion suggests that an impulse wave is now in development.
The notion that a sustained move toward higher prices is now in development is being supported by a bullish signal generated by the moving average convergence/divergence (MACD) indicator.
MACD is a momentum indicator that distinguishes whether 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 important information because a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it. This is why the waves within the wave structure have coincided with the applicable MACD signal.
I have reason to believe that a sustained move toward higher Namaste stock prices is now in development. My bullish view is being supported by a number of technical indications. Therefore, I am bullish on N stock until there are indications to suggest otherwise.