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Is GrowGeneration a Buy After Cannabis Stock Shakeout?

GrowGeneration had been on fire until the late-week volatility surged in the cannabis space. Let's get a look at the must-see chart.

The cannabis space has seen a ton of volatility lately. That includes GrowGeneration  (GRWG) - Get GrowGeneration Corp. Report, one of the more recent stocks to land on investors' radar.

Shares have been chugging higher with the rest of the group, but it wasn’t immune to the recent wave of volatility.

GrowGeneration had rallied more than 50% over a seven-day trading span in which the stock closed higher in each session during that stretch.

However, that did little to protect the stock from a two-day, 22.8% peak-to-trough skid. Others have felt the pain too. 

For instance, Tilray  (TLRY) - Get Tilray Brands Inc. Report rallied 50.9% on Wednesday and fell 49.7% on Thursday. Aphria  (APHA) - Get Aphria Inc Report, Canopy Growth  (CGC) - Get Canopy Growth Corporation Report and others have been volatile as well.

Let’s look at the charts for GrowGeneration.

Trading GrowGeneration

Daily chart of GrowGeneration stock.

Daily chart of GrowGeneration stock.

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GrowGeneration continues to trade pretty well. Despite the volatility over the past few days, shares are still up significantly.

From the recent low at $40.57, shares are still up about 40% at current levels. However, the trade is becoming a bit more nimble at this stage.

The recent dip sent shares down to the 21-day moving average, a mark that has held as support for two straight sessions. It also sent GrowGeneration back down to the prior highs and resistance area near $53.

GrowGeneration is finding support where it should find support, so that’s encouraging. However, it’s now struggling to get back over the 10-day moving average.

From here, bulls need one of two things: Either a rotation to the upside or lower prices to buy a bigger dip.

Regarding the rotation higher, GrowGeneration needs to reclaim the 10-day moving average, then the Thursday and Friday high. Above opens the door to the 161.8% extension near $62, followed by the all-time high up at $67.75.

Above all of these levels and perhaps GrowGeneration stock can climb to the 261.8% extension near $75.

On the downside, a break of Friday’s low could put the 10-day and 50-day moving averages in play. This zone was support last month and bulls will be looking for it to act as support if GrowGeneration gets there again.