Charting Man Dan on Cronos Group Inc’s (TSE:CRON | NYSE:CRON) Monthly Bull Volume


[Intro music]
Fraser Toms: Hey, we’re glad to be joined by Charting Man Dan – Dan McDermitt of The
Chart Guys. He is in Asheville, North Carolina, right
now. How’s it going, Dan? Dan McDermitt: Very good, glad to be back. Fraser Toms: Yeah, so we were just chatting
just a little bit. Just out of curiosity, I was sort of asking
you how you got into trading in the first place, because you’re – as you were saying,
it probably helps you’re not a typical suit and tie Wall Street guy. Dan McDermitt: Definitely. We’re entering an age with internet and
technology where people, especially in the cryptocurrency space as well, but people now
have more control of their financial freedom. And back ten, twenty years ago, it was, this
stuff’s too hard, I can’t understand it; I’m going to give my money to somebody who
specializes in it, and let them do their thing. And then we had all the disasters and all
the crashes and people saying Hey, maybe they don’t know what they’re doing so much,
and I have the internet here at my fingertips; I can learn how to do anything I want. And trading and investing has become one of
those avenues where people can empower themselves. So yeah, certainly not the suit-and-tie, fancy
car analyst that a lot of people are used to, and I think that allows for a lot of people
to connect to a certain degree and say hey, this person’s a lot more like me than that
person is, and if they can do it, maybe I can do it as well. So fortunately, connecting with a whole different
group, a whole different sort of person who has been, perhaps, excluded from what previously
would have been the financial markets. Fraser Toms: Yeah, for sure. So was it just the opportunity to have more
financial freedom, or was there something about charts and stocks that sort of grabbed
your attention and made you get really into it? Dan McDermitt: Both, but it definitely started
with freedom. I watched my dad growing up commute into a
city for 45 minutes to and from work every single day, and I did not want to do that. I did not want a desk job. I was in college for business management,
and I was on that path, and didn’t learn a whole lot about stocks, but I saw the opportunity,
honestly, seeing the shift in the US as states started to do their own thing with marijuana
laws. And really, it was California in 2010, which
failed to legalize, but that’s when things really started to pick up, and I said to myself,
Okay, there’s huge opportunity. I was reading about industrial hemp, I was
reading about CBD, I saw that opportunity, and I had two paths that I was on: I was either
going to go to Canada and learn from you guys – you guys had a decade head start on industrial
hemp, and I wanted to be in the field. We were talking about how I was a bit of a
farmer as well. So I wanted to learn the plants, and I said,
All right, I’m either going to Canada to learn how to grow this industrial hemp for
when it’s legalized in the US, or I’m going to look at the stock market. And I started playing in the stock market,
and that, I just fell in love with it in terms – it just works really well with my brain,
the way my brain works. I’ve always done well in school in that
kind of disciplined, western learning style, and that’s definitely translated into being
able to understand the charts and the way things work a lot easier. Fraser Toms: So yeah, that’s awesome to
hear. And knowing all that, I’ve said to some
colleagues around here, we’ve entered a time in the last little while where it seems,
at least to me, where it’s a lot harder to make money in this space. Maybe it’s because there’s a lot more
names out there, maybe it’s because there’s been a divergence away from sort of the leaders
and other stocks are sort of running on their own. What’s your take on what’s going on right
now? Dan McDermitt: Yeah, that’s definitely a
lot to do with it. I call it the funnel effect, and when I first
started trading stocks eight years ago, it was eight different penny stocks, and marijuana
penny stock companies; that was it. So if we had any kind of bullish news or anything,
if you googled anything about marijuana stocks, only these names came up, because that’s
all that was available. And that funnel effect allowed it to be easy
to make money, because if you’re in one of those names and money is going to come
into the sector, it’s going to bring all of those names up. But you are right: Now that funnel effect
is gone, and now there’s 100, 200, however many tickers to be watching, and we have these
scenarios where an individual name will run and we’ll have groups pump it and try and
make their money real quick, and there’s a lot more moving parts going on right now,
and it’s a lot harder to keep track of it all in terms of determining where to put your
money. We don’t have the same scenario as we did
a year or two ago, where the rising tides raised all the ships. And that’s for fundamental investors and
traders, that’s honestly ideal in the sense that now those fundamentals are mattering
a lot more and the weaker fundamentals or the drama in management is causing bearish
reactions in individual names, and the cream is rising to the top as far as our sector
leaders. Fraser Toms: Yeah. So what are you looking at right now, and
what’s sort of grabbing your attention? You sort of have a stable of names that you
always kind of look at, so what’s kind of caught your eye in the last couple of days,
let’s say? Dan McDermitt: Well, we finally started seeing
consolidation in the S&P 500, which is what I’ve been waiting for, because every single
time I’ve looked for a bullish position in the MJ space, in the back of my mind I’ve
always been saying to myself, okay, this move from the December lows is insane; what’s
going to happen to the sector when we get SPY weekly consolidation? And now we have that SPY weekly consolidation,
and we can say, Okay, this is what’s happening. And the best time to buy marijuana stocks,
whether it’s Canadian or US, in the recent past, has been the December dump, when things
were their bleakest. So now, after this multiple-week pullback
with all the drama between China and the US and the trade deal and the falling out, this
is potentially an opportunity. So I personally, if I’m looking longer-term,
and for me I’m looking in the US sector for longer term; I feel there’s better risk-to-reward
opportunity there as the laws continue to shift – but I would much rather be buying
in weakness than buying into strength if I’m looking long term, just because I know that
I would much rather be sitting on a position that has been pulling back significantly as
opposed to a position that has been running significantly, and if I’m buying at the
wrong time, I might have to sit through a whole bunch of red when it then begins to
pull back, if we get market weakness. So I welcome this market weakness to a certain
degree, and the question now is, can we keep the weekly uptrend of the S&P 500, and we’ll
go over that in just a minute. Fraser Toms: Yeah, that sounds good. The only thing I would say to that or think
about as well is, the trade talks, you know, that’s an ongoing thing, and also the – it
may not apply as much anymore, but this seasonal mentality of sell in May and go away. So I’d just be looking for, is this the
worst yet, or is there still more to come? Dan McDermitt: Well, today did a good job
for the bulls to alleviate some short-term concerns, and it’s honestly a market that’s
run by tweets and headlines right now, and a tweet or a headline comes out, and you just
watch the bots and the automated trading instantly react to it, and it’s the kind of scenario
where you have Trump and the administration doing everything they can to keep the stock
market propped up, and you have China wanting the stock market to get hurt, because they
know that that puts more pressure on Trump. So it’s this battle, it’s this trade war,
that is using markets as well, and it can definitely get worse. So you know, we have to have a game plan,
and the best game plan for establishing longer-term positions is doing it slowly. You don’t want to put all your money in
and then that’s it, and you hope you nailed the bottom. You want to be adding, maybe, a little bit
a month, a little bit every couple of months, whatever it is, to get an average cost basis,
and if we do see continued weakness, that allows you to potentially lower that cost
basis a lot. If you’re investing based on fundamentals
and you’re looking longer term, multiple years out, and looking for that shift in the
laws in the US. Fraser Toms: Okay, awesome. Well, speaking of different terms to be investing,
why don’t we have a look at some charts and see what’s going on? Dan McDermitt: So here’s the S&P 500, as
always, the backbone of our analysis. We want to know what the general, broader
market is doing, and then we want to see how the sector is responding to that. Then when the sector has been its strongest
in the past couple of years, the S&P 500 has been at all-time highs. So where we stand right now, again, we’re
in a market that is completely subject to tweets, and a tweet saved the bulls today. We started with a very weak pullback, we had
a weak bounce on the daily time frame, and we opened lower than the low of yesterday. But a tweet came out that said Hey, maybe
Trump’s not going to raise these tariffs on autos and, you know, a little bit of backtracking
from the US, which further leads to a narrative of maybe they’re getting closer to a deal
because the US is being less hard-headed and willing to, you know, comply a little bit. Either way, we have seen a big shift in momentum
from that tweet, and that tweet alone did it, looking at the five-minute time frame,
you can see where that tweet happened. Don’t even need to point that out, but if
you’re struggling, there’s the volume, there is that tweet; look at the actions since
the Tweet. So we have the four-hour time frame, which
I like for clarity because it shows a clear little trend change with a higher low and
then a higher high breaking the high of yesterday, and we have to keep in mind that the S&P 500
is in a weekly uptrend. The support level to hold was 27764, and we
held that level right now. So as long as the weekly uptrend is on track,
the bulls have control. If we lose this weekly uptrend, it completely
shifts my perspective on the market on the whole, and it would make me a lot less cautious
as a bull. But right now, the bulls are buying the dip
while maintaining the weekly upturn, and the question is, can we see a clear change in
trend? What really has been happening is, the pattern
is, we get weakness in extended hours when some kind of news articles comes out, and
then the bulls do most of the buying during the day. You can see on this big pullback from the
all-time high, we have pulled back in the S&P 500 five percent, but we’ve only seen
really two clear red days. Most of the days a re lower opens with bulls
buying that dip. So I’m still holding out for the bulls to
keep the weekly uptrend, which would be best-case scenario for the sector as a whole. Watching CGC now, CGC is just breaking a pattern
where we had a lower high every single day of trading for 10 days in a row. That has now changed. So let’s see if now, weekly timeframe, if
CGC is forming a weekly higher low. Again, it’s no coincidence that we have
three weeks of pullback here, and SPY on the weekly timeframe here, three weeks of pullback. So if SPY has formed its weekly higher low
and is heading back to all time highs, we’re going to anticipate that CGC has formed its
weekly higher low and it’s going to head back up to the recent top in the 52s. So bulls want, the more follow-through the
better to try and make this move convincing and see some volume show up, so we’ll certainly
be watching that as the sector leader. ACB bulls doing a huge job today of buying
the gap back down open. We had CNBC pumping a narrative that TLRY
is surging on earnings; here we have TLRY down significantly this morning, and ACB,
which started down, is now seeing a huge bull move to the upside. This is the highest price for ACB – I might
have just said CGC, but I’m referring to ACB – highest price we’ve seen here in the
last four days. And the question now is, can ACB form our
monthly higher low? So it’s all about longer-term time frames,
and we see now that we have a tightening range and the bulls on ACB, if this can be our monthly
higher low and then the bulls break 10.32, that would be very notable. And look at the CGC monthly time frame and
how similar that is. We had a tightening range, we had a brief
consolidation, and then the bulls did break to a higher high. Having gotten that follow-through yet, but
that little two-week consolidation into the bull break, and looking at ACB now, there’s
our two-week consolidation, can we lead into a bull break is the question? I’m also watching the CRON monthly time
frame, and I do have a CRON swing position because I like this monthly chart. You look at the weekly or daily chart for
CRON, and we’ve been pulling back for a significant amount of time. But you look at this monthly chart, it’s
low bear volume, high bull volume, which is exactly what the bulls want to see. We’re looking at just a higher low forming. I use the 12 period exponential moving average
as a visual guide; I actually brought that over from the cryptocurrency space after I
had so much success with it there, and now I’m liking applying it to stocks as well. But that’s just a visual guide to see every
single time this chart has consolidated in the history of the stock, we have held that
support level. And we just bounced off of it, which is why
I made an entry on CRON when the daily RSI was oversold. Need a lot more follow-through to be convinced
in that shift in momentum, but if the SPY bulls can head back to all-time highs, that
will increase the odds significantly that our monthly higher lows have formed on a lot
of these names. So that’s it for the Canadian MJ sector;
I’m still watching the US MJ sector. We do still have a bunch of names still in
pretty strong uptrends overall, and again, more so have to do that due diligence in the
MJ sector. We’ve had some negative news come out for
TRUL; we’ve had MedMen, and that’s Trulieve – MedMen has certainly had some bearish
reaction to its fundamentals and its management that the market is perceiving poorly. So if looking for long-term US MJ names, make
sure and pick a few names that not only have some strength on their charts, but certainly
want that fundamental backing, because we might need to hold these names for a year
or two if we’re looking long-term and we want to capitalize on changes in laws, it
really might take a while. So we have to find those names that have the
solid backbone of fundamentals, and then hopefully the technicals follow through with that, as
well. Fraser Toms: Awesome, thanks so much, Dan,
once again, for coming on the show and doing a bang-up job. Dan McDermitt: Appreciate it. See you next time.

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