Cronos Beats Estimates - Stock Stays Below Risky Level

Buy Cronos on weakness to its monthly value level at $2.84. Reduce holdings on strength to the 200-week SMA at $6.94 and to its 200-day SMA at $8.10.
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Cronos Group  (CRON) - Get Report opened higher on Friday after beating earnings-per-share estimates. 

The stock set an opening high of $5.70, staying below its weekly risky level at $5.72. The stock is below a death cross on its daily chart and its weekly chart is neutral.

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Cronos traded as high as $5.70 at Friday’s open. The stock is down 25.7% year to date and in bear market territory, 68.3% below its 52-week high of $17.96 set on June 11, 2019. 

The stock is also in bull market territory 42.5% above its March 16 low of $4.

Its monthly value level is at a new 52-week low at $2.84. Its weekly risky level is $5.72, and its quarterly risky level is $13.38.

The Daily Chart for Cronos

Daily Chart foe Cronos

Daily Chart foe Cronos

Courtesy of Refinitiv XENITH

The daily chart for Cronos shows that the stock has been below a death cross since August 13, 2019. 

This sell signal occurred when the 50-day simple moving average declined below the 200-day simple moving average.

This tracked the stock to its March 16 low of $4.00. This day was a key reversal which is a buy signal. The close on March 16 was above the prior day’s high which defines a key reversal.

This tracked the stock to its April 27 high of $6.72.

The stock has been tracking the 50-day SMA lower since March 26. The 50-day is $5.76, just above the weekly pivot at $5.72.

The 200-day SMA has declined to $8.10.

The Weekly Chart for Cronos

Weekly Chart for Cronos

Weekly Chart for Cronos

 Courtesy of Refinitiv XENITH

The weekly chart for Cronos is neutral with the stock below its five-week modified moving average of $5.90. 

The 200-week simple moving average or “reversion to the mean” is just starting to show at $6.94.

The 12x3x3 weekly slow stochastic reading is projected to rise to 45.22 this week up from 43.55 on May 1.

Trading Strategy: Buy Cronos on weakness to its monthly value level at $2.84. Reduce holdings on strength to the 200-week SMA at $6.94 and to its 200-day SMA at $8.10.

If the stock were to decline below $3.00 a share it would become an option on survival. This is when you invest with money you can afford to totally lose.

How to use my value levels and risky levels:

The closes on Dec. 31, 2019 were inputs to my proprietary analytics. Semiannual and annual levels remain on the charts. Each uses the last nine closes in these time horizons.

Second quarter 2020 levels were set established based upon the March 31 closes. The monthly level for May was based upon the close on April 30.

New weekly levels are calculated after the end of each week.

New quarterly levels occur at the end of each quarter. Semiannual levels are updated at mid-year. Annual levels are in play all year long.

My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in.

To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.

How to use 12x3x3 Weekly Slow Stochastic Readings:

My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.

The stochastic reading covers the last 12 weeks of highs, lows and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading and I found that the slow reading worked the best.

The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered overbought and readings below 20.00 considered oversold.

A reading above 90.00 is considered an “inflating parabolic bubble” formation that is typically followed by a decline of 10% to 20% over the next three to five months.

A reading below 10.00 is considered as being “too cheap to ignore” which typically is followed by gains of 10% to 20% over the next three to five months.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.