Canopy Growth Stock Could Hit New Highs, Says Signal

A historically bullish signal just flashed on the charts for Canopy

Cannabis concern Canopy Growth Corp (NYSE:CGC) got off to a hot start in 2019, and is now up 61.1% year-to-date. The equity has taken a breather after bounding up the charts earlier this year, with support at the $42 level serving as a recent floor. While the stock is inching lower today, a historically bullish signal just flashed on the charts which could mean even more upside for CGC.

Specifically, the equity just came within one standard deviation of its 160-day moving average. According to data from Schaeffer's Quantitative Analyst Rocky White, the equity has run into this trendline three other times in the past three years. The equity was higher one week later 67% of the time, averaging a whopping 19.3% gain. From where the stock currently sits at $42.96, a similar move would have it trading atop the $51 level -- home to its mid-October record highs.

While the majority of analysts have a positive outlook on Canopy, there's still room for upgrades, should the security continue north. Currently, CGC holds five "buy" or better ratings, and three "holds."

Despite the analyst optimism, short sellers are still swarming. Short interest rose 9.5% in the last two reporting periods. The 23.3 million shorted shares now represent a healthy 11.4% of the stock's available float, and would take three days to cover at CGC's average daily pace of trading. A potential short squeeze could add additional tailwinds, if these traders start jumping off the bearish bandwagon.