Although there is little net change in Captiva Verde Land Corp. (PWR:CSE) since we last looked at it just over a month ago, its technical condition has continued to improve. The reason for saying this is the appearance of heavy upside volume on the sharp rally late last month that has driven the Accumulation line to new highs, as we can see on the latest 1-year chart below.
There was a slightly disconcerting dip in the middle of last month, but key support held and as a result of that move we must now consider the Right Shoulder of the prospective Head-and-Shoulders bottom to be this dip, rather than the minor one early in September. Otherwise the interpretation of the overall pattern remains the same—positive, and as mentioned above the high volume on the latest sharp rally bodes well. Latest action suggests that it is building up to something, and with a small countertrend Flag looking like it is completing, it is suspected that it is getting ready to break out above the resistance level at C$0.30.
With respect to fundamental considerations, you may recall that Captiva Verde is in possession of licenses to do business in Mexico, a potentially huge market, and thus the news that the Mexican Supreme Court has decreed that cannabis could no longer be classified as an illegal substance means that they have in effect legalized it, which is really big news in a country that has three times the population of Canada and is also blessed with ideal growing conditions. So in future it will be possible for cannabis farmers to make money legally from the crop. The ruling from the Supreme Court ends the blanket ban on cannabis in Mexico and starts the ball rolling in the direction of legalization, which will take time as all the peripheral legislation will have to be passed. Nevertheless this sea change should provide a big boost to cannabis companies and stocks operating in Mexico or preparing to do so.
We therefore stay long and the stock is rated a strong buy at this juncture. There are 87.6 million shares in issue and the stock trades in improving volumes on the U.S. OTC market where as ever limit orders should be employed.
Captiva Verde Land Corp., PWR.CSX, CPIVF on OTC, trading at C$0.23, $0.17 on 8th November 2019.
Originally posted on cliveMaund.com at 8.40 am EST on 11th November 2019.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.[NLINSERT]
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