Are we at the tipping point for marijuana stocks? We're seeing c-suites getting flushed out and sentiment about legal marijuana at what is arguably an all-time low. However, cannabis stocks got lifted on Friday as pot behemoth Canopy Growth Corp. (NYSE:CGC)(TSX:WEED) actually topped analyst estimates on both the top and bottom lines.
This rising tide lifted all ships, including VIVO Cannabis (TSX:VIVO)(OTCQX:VVCIF), which already trades on the top OTC marketplace and a few weeks ago graduated to the TSX from the smaller Venture exchange. Fundamentally, the company is keeping up with Cannabis 2.0 in Canada, focusing on rolling out new vape, chocolates and concentrate products under its Canna Farms and Fireside brands.
It's fair to say that VIVO has actually had an impressive 2020 to date, even with a recent pullback. Shares ended 2019 at 20.5 cents before catapulting ahead to 51 cents on January 24. A consolidation ensued, drawing the stock to a low of 27 cents, which happens to be the area of the 50-day moving average (DMA).
A flat day on Thursday and a big jump of 16.4% on Friday leaves the stock looking to rise again from a close at 32 cents. There is some resistance right here for VIVO and then some more at 36 cents. Above that, the 200 DMA and resistance await at 40 cents, which is where we're setting our short-term price target.
In order to keep this a trade with a proper risk/reward profile, we're looking at support at 30 cents and 29 cents. Sure, there is more bottom support at recent low of 27 cents, but we're betting if 30 cents doesn't hold, the 50 DMA won't either. Our stop/loss is going at 28.5 cents.
Taking an entry at $0.32 on Tuesday presents an upside opportunity of 25.0% to $0.40. A stop/loss at $0.285 keeps the risk side to 10.9%.
