The market pullback helps us see which stocks are stronger than the others.
It will also tell us when to buy these stronger stocks.
Here’s how to apply this tactic applied to one of the best trading pot stocks.
Canopy Growth (CGC) held above its Monday low when the market did not. This is a good sign of relative strength, and it gives us good reason to suspect it may be ready to move higher.
The next step is to look for a good entry point. The big down day on Monday provides that too.
If CGC trades over Monday’s high before the market does the same, then this will again demonstrate good relative strength.
However, I’m not going to apply this tactic to just any stock.
I’m looking at CGC because a move over Monday’s high ($49.28) also represents a move back over an important support and resistance level of $49.
Additionally, the Monday low of $47 was a good level of support before Monday.
In summary, the market sell-off pushed CGC lower, but it stopped at support, and held up better than the market. If it starts heading higher faster than the market, then it’s a good trade.
So the entry is when it trades over $49.50 and the stop is under $47
Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation