Tilray is the hottest marijuana company trading on the U.S. stock market. Its stock is undergoing a massive short squeeze, which can create big gains or losses, depending how a trader is positioned. Below, I will explain a short-squeeze strategy that I prefer.
As a prerequisite to understanding the content below, please start out by reading “How to potentially become a marijuana millionaire, albeit carefully.”
Let’s now build more background with the help of a chart, and then I will discuss my strategy.
Chart
Please click here for an annotated chart of Tilray TLRY, – Please note the following:
• According to algorithms at The Arora Report, the vast majority of the rise in marijuana stock Tilray is due to a short squeeze.
• A short squeeze occurs when short-sellers, who bet on stocks falling, are compelled to buy shares to cover their positions. That occurs when the stock keeps rising.
• Tilray is not only the hottest cannabis stock but perhaps the hottest stock in the entire market, as is obvious from the chart.
• The chart shows that the short squeeze has occurred in three legs.
• During the short squeeze, there have been days when the daily volume has been greater than the float.
• Three legs in a short squeeze are common. More than five legs are rare.
• Here is Arora’s law on short squeezes: “All short squeezes eventually end.” When a monster short squeeze ends, typically the stock falls rapidly. Less informed investors who are part of the momo (momentum) crowd often become the bag holders.
• Short squeezes are also being seen in other marijuana stocks, such as Canopy Growth CGC, Cronos CRON, Aurora Cannabis ACBFF, Neptune Technologies NEPT, New Age Beverage NBEV, Aphria APHQ and marijuana ETF MJ.…Read more at MarketWatch.
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