OGRMF Stock: One More Hurdle
Investing is a fickle activity that has a tendency to play with one’s emotions.
For example, just when we believe we are certain about the outcome of a particular event, that is often when we are completely wrong. It’s like old adages, which can be correct at times and completely off base at other times.
Of all the old adages I have come across, the only one that continues to resonate with me is “buy on rumor and sell on news.”
This advice continues to work time and time again. If you’ve ever wondered why stocks sell off on good news, that old adage explains it perfectly.
The “rumor” event surrounding the marijuana sector is the date when Canadian marijuana legalization goes into effect, which is set to happen sometime this summer. I believe this event will act as the “selling” event, and investors are currently bidding up this sector going into that event.
OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI) stock is one of the strongest names among its peers. I am focusing on OGRMF stock because there are technical indications suggesting that this progressive outperformance is set to continue.
At the moment, there is a hurdle that OrganiGram stock needs to overcome. This hurdle is highlighted on the following stock chart.
Chart courtesy of StockCharts.com
This chart illustrates that, since April 10, OGRMF stock has been sustaining a move toward higher prices.
This move toward higher prices has been orderly, and I was able to capture it using a simple uptrend line.
This uptrend line was created by simply connecting the series of lows that characterized this bullish trend. This uptrend line is significant because it has been supporting OrganiGram stock as it has made a progressive move toward higher prices.
Over the past few days, this progressive move has reached a significant level of price resistance. This level of resistance is where the stock peaked in January, before the correction in this sector ensued.
Breaking above this level of price resistance will be a significant feat because it will put OGRMF stock among the select few in the legal marijuana sector that have been able to accomplish this task. Taking out the January peak, which is also the all-time high, will suggest that further gains are likely to follow.
I have the inclination to believe that such an event is likely to occur in the not-too-distant future.
My belief is based on the technical indications highlighted on the following stock chart.
Chart courtesy of StockCharts.com
This OGRMF stock chart has been annotated in order to highlight the wave structure responsible for creating and sustaining the bullish trend in OrganiGram stock.
This wave structure consists of two distinct waves: an impulse wave and a consolidation wave.
The impulse waves are highlighted in green and they are advancing in nature. Impulse waves capture the stage in a bullish trend when a stock sustains a move toward higher prices.
The consolidation waves are highlighted in purple and they are corrective in nature. Consolidation waves capture the stage in a bullish trend when a stock price corrects and refrains from advancing.
Corrective price action is an important attribute of every bullish trend because it creates the necessary conditions for an advancing impulse wave to follow.
These waves work together in order to create and sustain a bullish trend. The development of these individual waves has been supported by the moving average convergence/divergence (MACD).
MACD is a momentum indicator that determines 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 information is pertinent because a stock cannot sustain a move in either direction unless the applicable momentum is supporting it.
The wave structure has coincided very nicely with the MACD indicator. Bullish MACD signals have accompanied impulse waves, while bearish MACD signals have accompanied consolidation waves.
The MACD indicator is currently in bullish alignment, implying that an impulse wave is now in development.
Every impulse wave that preceded this one has gone on to make a new all-time high, and I do not think that this time will be any different.
A number of indications are already suggesting that OrganiGram stock is likely to appreciate.
In order to confirm the notion of higher OGRMF stock prices, these indications need be accompanied with a break above resistance, which currently resides at $4.60.