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Cannabis stocks need to fight their way out of their funk. That’s true for names like Canopy Growth (NYSE:CGC) and New Age Beverages (NASDAQ:NBEV), but it’s critical for Cronos Group (NASDAQ:CRON). CRON stock is not only down by a third since its March high, but is on the verge of breaking under a crucial technical support level.
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Some — perhaps most — would argue that the shape of a chart is irrelevant. A chart’s history shouldn’t dictate its future. Rather, a company’s results and prospects are reflected in its stock’s movement.
The fact is, however, the movement of a marijuana stock shapes the rhetoric about that company as much as it’s shaped by the rhetoric. If Cronos stock slips any further, it would become alarmingly easy for the masses to view it as a liability.
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Charting CRON Stock
It’s not difficult to see.
After an overheated rally in January and February set the stage for significant profit-taking in March and April, the 200-day moving average line (plotted on the white line on the chart below) began to serve as a technical floor. It’s not yet become a pushoff point, though, and it doesn’t appear it’s going to. Just within the past several days the sellers have tested the pivotal 200-day moving average line as support again, and it’s failing to even modestly repel the effort.
The 200-day moving average line is regarded by some as the most important of all the trend indicators. It’s admittedly simplistic, but still has significant psychological implications because so many traders still see it as a make-or-break level.
There’s modest encouragement in the fact that the weakness since March’s high has been on relatively low volume. That suggests there’s not necessarily a great deal of conviction behind the selling; investors are just biding their time.
Conversely, the fact that the other aforementioned names, like most marijuana stocks of late, are falling is a red flag. Group-wide movement tends to indicate longer-lived, philosophical doubt.
Analysts Still in Doubt
Still, Cronos Group stock is a standout for all the wrong reasons. Chief among them is the fact that among all cannabis stocks, CRON stock remains one of the analyst community’s least favorite.
As of the most recent look, analysts collectively rate Cronos at a little less than a Hold … tiptoeing into Sell territory. Rivals New Age Beverages and Canopy Growth, for perspective, are considered a Buy and something that’s almost a full Buy, respectively. Hexo (NYSEAMERICAN:HEXO) is also closer to a Buy than a Hold.