Don't Start Calling Bottoms Yet
The past few weeks, we've heard it all, bottoms, support, yadda, yadda......32, 30, .28, .25. .21......
.18 is where it was headed and it was in the charts after the 2nd failed attempt at .50 due to a gap and the parabolic movement at .18. The 66% Fibonacci retracement is at .18 and the parabolic rise was unsustainable minus any fundamental anomaly. My confirmation of the .18 target was on March 29 when MJNA was at .25 after the intraday trading put up a bearish engulfing candlestick on the chart. I don't think much of TA but there are a occasionally indicators like the gap at .18, followed by the candlestick, it was inevitable .It's kind of weird that a penny stock is moving so technically sufficient, but that is the first step to being a high volume, liquid equity.
I nibbled here and there with the occasiional short position. Let me tell you shorting this stock is a grand waste of time. ETrade wouldn't allow me to short despite having a a large share position to borrow against and the highest margin stauts meaning I can sell uncovered calls and short stocks that I don't own (ETrade covers the borrowing of shares shorted). I had to go through my broker at Merrill Lynch (former boss during my internship and long time friend) where the firm required me to transfer the shares because the firm would not borrow, nor did they own the MJNA shares to short on my behalf. Here's the kicker, my broker stated that ML had restrictions that do not allow the firm to purchase equity in marijuana related businesses. He couldn't say if the firm was ready to invest capital in the future pending legalization but he said he would not be surprised if dark pools were doing buying on their behalf. Needless to say, I got my balls busted for playing a penny stock, paid a premium to short it through my broker ($125 in and out of trade, not bad but more the $15 with ETrade), and I made the recent drop more digestible.
This week there was strong support with high volume at .18, signaling capitulation. Despite my bullish disposition I don't dare call the upside potential in share price. There are far too many factors at play. I would expect a slight technical bounce off the 200EMA and back to a normal std dev, aka Bollinger range but if the 200EMA fails, .09 is the next number to watch out for since it was the latest support before popping to .18 then skyrocketing to .50. Sure its way oversold but when there are unanswered charges of fraud against a company, those indicators are meaningless. I added to my position like I said I would $18,000, or 100k @.18, I have another $18,000 I'm willing to commit but will hold off in case we see .09
I'd much rather miss out on the chance to get extra shares at .09 and just see the stock go to $1 but I'm in no hurry and I got some cash to spend.
Keep your eyes open and your mind will follow.
