It’s not typical on Wall Street that one day will define a trend. But this rarer occurrence does appear to be setting up for New Age Beverages (NASDAQ:NBEV) and NBEV stock bulls.
Sometimes investors simply have to embrace just what a difference a day can make for a company and its shares going forward. And right now this less-common, game-changing feat is in play in specialty drinks maker NBEV stock following a very bullish session to kick off the trading week.
New Age Beverages is best known for a future line of drinks infused with CBD, the non-intoxicating ingredient in cannabis, when and if, regulators from the U.S. Food and Drug Administration give it the green light.
For now, Marley Mate, an organic yerba mate beverage, is still a big win for NBEV stock. And the company can now reach a national market through Walmart stores, potentially see a large increase in sales and profits, while still having a potential ace in the hole with a CBD beverage down the road.
NBEV Stock Weekly Chart
My thoughts when looking at the weekly view of NBEV stock are shares could get a good deal higher from their current position without help from regulators. The thing is, despite Monday’s eye candy-like percentage gain, New Age Beverage isn’t overbought — and, in fact, shares could be considered a buy today.
For one, there’s an oversold stochastics crossover signal in place. Nice, right? Also a plus, NBEV shares are still inside the weekly Bollinger Band and price action is now confirming a higher-low pattern in an emerging uptrend.
All told, there are reasons for purchasing NBEV stock today. Having said that, I am more agreeable to waiting on one of two scenarios to play out on the price chart of NBEV stock before initiating a purchase.
Buying NBEV Stock
The first situation that could make for a much lower-risk entry is for a simple pullback pattern of three to possibly seven days to develop in NBEV stock. If this was to occur being ready to purchase a confirmed pivot low and having a trailing stop loss initially placed below the pattern makes sense.
The second type of favored purchase in NBEV stock is momentum-based. Seeing how NBEV stock isn’t overbought yet, buying shares above $7.20 looks approachable without having to take on additional risk on the price chart.
An entry thru $7.20 will allow shares to reclaim the former high from 2017. Also, by sacrificing some profit, NBEV can get above its weekly closing high in 2019, which found resistance at the prior high and a level now reinforced by the apex of a bearish triangle.
A stop-loss is also definitely required when entering on momentum. Here, I’d suggest $1.00 of exposure. That keeps risk manageable in a volatile stock without playing it too close to the vest and getting stopped out prematurely. And if all goes well, this trader will be in position to ride a bonafide uptrend — and quite possibly to fresh highs above $10 that don’t go up in smoke.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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