Cronos Group Inc. (CRON) shares rose more than 20% on Wednesday following the company's up-listing from the OTC Markets, where it traded as an American Depositary Receipt (ADR), to the NASDAQ Global Market. The company owns two Canadian-licensed producers of medical marijuana and has built a presence across four continents, making it one of the most established cannabis companies in the market.
Retail demand for cannabis stocks has soared in the United States. In fact, TD Ameritrade CEO Tim Hockey told investors earlier this year that cannabis stocks accounted for about 4% of the broker's daily average trades. Many of these companies trade over the counter, which makes them less accessible and transparent for mainstream investors. After up-listing to the NASDAQ, Cronos Group is likely benefiting from the greater exposure. (See also: Cronos Group Will Be Nasdaq's First Pot Stock.)
From a technical standpoint, the stock rebounded from its 50-day moving average at around $7.37, past its pivot point at $8.58, to retest its prior reaction highs. The relative strength index (RSI) appears modestly overbought at 63.1, but the moving average convergence divergence (MACD) could see a near-term bullish crossover. These two indicators suggest that the stock could see some near-term consolidation before a further move higher or lower.
Traders should watch for some consolidation above the pivot point support at $8.58 before a potential move higher to test R1 resistance at $10.67. If these levels are broken, the stock could retest its prior highs of around $12.00. If the stock breaks down from the pivot point, shares could move down to retest the 50-day moving average at $7.37. A breakdown from these levels could lead to a move down to S1 support at $5.27. (For more, see: 10 Canadian Marijuana Stocks for Your Portfolio.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.