TER Stock: Technical Indicators Are in Bullish Alignment
2017 was an incredible year for marijuana stocks, as the entire sector moved higher. The rising tide that was responsible for lifting the sector has now gone out and, as a result, the entire sector is going through a painful price correction.
During times of duress, many investors seek a catalyst that will give their sector a bump. Most of the time, this catalyst is just based on hope. As a result, nothing ever comes of it. In this case, the retail investors I have spoken to continue to see the legalization of marijuana in Canada set for July as a catalyst.
This date is fast approaching. Whether it will act as a catalyst that sends this sector higher remains to be seen, but, in anticipation of it, I am on the lookout for stocks within this sector that are exhibiting signs of inherent strength. If this sector does find its footing again, these are the stocks that are going to continue to outperform.
It didn’t take me long to find what I was looking for, because I stumbled upon a marijuana stock that is competently bucking the trend, and it’s currently forging new highs.
The investment in question is TerrAscend Corp (OTCMKTS:TRSSF, CNSX:TER) stock, and this marijuana stock is standing tall, flexing its muscles as its peers correct. Aside from just forging new highs, there are a number of technical developments setting TER stock aside from its peers, and these developments are suggesting that this level of outperformance is set to continue.
These technical developments are highlighted on the following TerrAscend stock chart.
Chart courtesy of StockCharts.com
Since TerrAscend stock began appreciating in mid-November, the move toward higher prices has been supported by constructive price action and a very influential monument indicator.
Constructive price action consists of two distinct waves: an impulse wave and a consolidation wave. These waves are responsible for creating and sustaining a trend.
The waves highlighted in green are impulse waves, and they define the period in a bullish trend when a stock makes a sustained and uninterrupted move toward higher prices.
The wave highlighted in purple is a consolidation wave, and this wave defines the period in a bullish trend when the stock price corrects and refrains from staging an advance. Corrective price action is necessary in every bullish trend because it serves to unwind overbought conditions, restoring the health to a bullish trend. This creates the necessary environment where an impulse wave can flourish.
In early March, TER stock completed a consolidation wave by exiting it in an upward direction, and an advancing impulse wave has developed a result. The development of this impulse wave is being supported by the moving average convergence/divergence (MACD) indicator.
The MACD indicator is used to determine whether bullish or bearish momentum is influencing the trading action in a stock. Bullish momentum implies that the stock is likely to appreciate, while bearish momentum implies that the stock is likely to depreciate.
This indicator is very significant and influential because a stock cannot sustain a move in either direction unless the applicable momentum is supporting it, which comes in very handy when trying to determine whether an advancing impulse wave or a corrective consolidation wave is in development.
A bullish MACD cross in September 2017 correctly confirmed that an advancing impulse wave was in development, while a bearish MACD cross in December 2017 correctly confirmed that a corrective consolidation wave was in development.
Currently, an advancing impulse wave is in development and it is being supported by a bullish MACD cross that was generated in February 2018. As long as the MACD indicator remains in bullish alignment, it will continue to suggest that higher TerrAscend stock prices are in development.
The following TER stock chart illustrates the characteristic that separates TerrAscend stock from its peers.
Chart courtesy of StockCharts.com
This is the same TerrAscend stock chart, but the scale has been changed to weekly bars. The focus is once again on the MACD indicator.
Every major marijuana stock, including exchange-traded funds (ETFs), has already created a bearish MACD cross on its weekly charts, but TER stock has yet to do so. A bearish MACD cross was on the verge of being created, but it was smartly averted as the TerrAscend stock price began to appreciate.
A weekly signal takes precedence over a daily signal, and the fact that the MACD indicator remains in bullish alignment reinforces the bullish signals generated on the daily charts, which are reinforcing the notion that higher TER stock prices are on the horizon, as TerrAscend continues to outperform its peers.
I am bullish on TerrAscend stock because the technical indications on the company’s stock chart are implying that such a view is warranted. I will maintain this bullish view on TER stock until there are indications suggesting that a bullish view is no longer warranted.