CNNC stock (CNNC: OTC) has had a bumpy ride since it first started quoting in March 2010. The stock opened for its first trading day at $600, and over the next two months managed a rally to its all-time high of $2,280 in May 2010.
The glory was short-lived and CNNC stock plummeted to a new low of $206 in February 2011. Since then, investors and traders have not looked back, and the price of the company’s stock has continued to decline.
Cannonau Corp. was founded in April 2007 and is headquartered in Skaneateles, New York. The company produces cannabidiol-based products such as oils, sprays, topicals, and gummies. Cannonau currently has only four employees.
Let’s have a look at the fundamentals of this company and then we’ll go through a technical analysis of the short-term and long-term horizons of CNNC stock.
CNNC Stock Price Fundamentals
There was no publicly available information on Cannonau Corp. Other than the corporate information mentioned above. However, we can analyze the cannabinoid industry in general. As reported by Graphical Research the cannabidiol market in North America could increase to more than $61 billion by 2027.
They explain that there is an ongoing trend shift towards wellbeing and health products based on these products. Millennials are leading the way and a favorable legal structure is allowing for steady expansion.
Forbes also says that the cannabidiol market in North America has a lot of potential in the coming years. They see the market value at 2020 was $4.6 billion, but they expect that number to increase to $15 billion in 2024, and to $20 billion by 2025.
So, we know that there is plenty of growth potential, but we don’t have any information regarding CNNC stock and whether it has the capacity to take advantage of a seemingly favorable industry environment.
CNNC Stock Price Short-Term Technical Analysis
The chart below shows the candle day chart for the price of CNNC stock from October 2021 to June 2022. The chart also shows the Ichimoku cloud, which is a great tool for determining the predominant trend. As well as the Aroon and the RedK MoBars technical indicators.
Most of the price action since the beginning of the year has occurred between $0.034 and $0.064. This is a fairly tight price range, even though in percentage terms we have seen some large swings within the range.
More significant, is the fact that the price of CNNC stock has not continued to trend down. Sideways trading ranges usually mean a consolidation period before the trend continues. However, we know that at times that consolidation price ranges can act as a catalyst to a trend reversal.
The sideways price action has also coincided with the belly of the Ichimoku cloud. The belly of the Ichimoku cloud is considered support and resistance areas, depending on the trend. So, now we also have the belly of the Ichimoku cloud acting as a resistance to further upward price action.
Higher Levels Needed
A break above the cloud could indicate momentum picking up for a rally to higher levels. We saw one attempt to break above the cloud in early June. However, the rally was short-lived and the price of CNNC stock fell back to the cloud and the ongoing range.
The Aroon and RedK MoBar indicators are both showing a continued sideways trend. The Aroon with both red and green lines sloping parallel to each other means we are still in a sideways trend. The MoBars indicator is still showing small bars, indicating little momentum, and again a sideways trend.
We need to see a break above the cloud that lasts a few consecutive days before we might get those indicators showing momentum of an upward trend.
CNNC Stock Price Long-Term Technical Analysis
Having a look at the week chart we can see that the price of CNNC stock has been trending sideways, with a small skew downwards, since September 2021. This flat price action came a few months after its last attempt to rally to new highs.
In late July 2021, CNNC stock price went from a low of $0.0506 to a peak of $0.25 within 3 weeks. As you can see the bullish momentum was short-lived, and from that point, the price continued to fall to current levels.
We are now getting close to the belly of the Ichimoku Cloud on the week chart. This cloud can create even more resistance to any new high highs. Also, it’s a very deep cloud, and for the long-term to turn bullish price action would need to break through the top side of the cloud.
From the chart below we can appreciate the size of the Ichimoku cloud on the week chart. If the bullish rally were to happen now, the price would need to go above $7.17 for the technical analysis from the Ichimoku cloud to turn bullish.
At current levels, technical analysis would indicate that CNNC stock is in a downward and sideways trend. And it would take some exceptional news to get the price above the current levels that might spark a renewed bull run.
CNNC looks like a stock that is not very well suited to day trading or trend trading either. The current price of a few cents, coupled with low daily trading volumes makes this an illiquid asset for a day trader. You would have a hard time getting in and out of your day trades and probably wouldn’t be able to put on enough volume to make the trade worth it.
The price range shown over the past weeks is very tight and open to a large swing either way. Although the current long-term technical analysis for CNNC stock is a continued downtrend. You have a risk of an upward spike from a breakout of the current sideways pattern on the day chart.
With the illiquid nature of the asset, a contrarian move to your position could cost you much more than your initial stop loss. If you are bullish on this company my play for a stock of this type is to buy and hold.
You can treat the few cents you pay per share as the premium you would pay on an option. In fact, you can treat the position just like an option. If price action goes up then you will profit, if the company goes bust you will lose the premium you invested to hold the position.
The good thing about this quasi-option is that you have no expiry, at least as long as the company keeps operating. So, you can sit on this stock and hold the position without a lot of stress like you might when trading or investing in active markets.
As always, seek the advice of your financial advisor to determine if an investment is a good fit for you. If you are interested in options and would like to get professional help and trade in stock options, you can read our review of the top stock options trading services here.