For the trading week that ended September 16, my proprietary Canadian Cannabis Company Index (MCCCI) decreased by 8.0% compared to the prior week when it increased by 6.3%. The index consists of 22 stocks, many of which are among the most widely held holdings of the 3 ETFs (MJ, CNBS, and THCX) that I consider to be a reliable barometer of the Canadian cannabis sector. MCCCI's differentiated business model is both weighted and market capitalization based because I believe that this approach best represents the current landscape of the Canadian cannabis sector. Now let us look at this week’s good, bad, and ugly stocks, shall we?
 

Image by Herbal Hemp from Pixabay
 

The Good

There were no stocks that increased by more than 10%, which is my metric for inclusion in this category.

The Bad

There were 4 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: CGC -15.5%, HEXO -13.6%, TRSSF -13.2% and ACB -10.6%. Canopy Growth Corporation is the 2^nd highest capitalization stock in the MCCCI and a proxy for the sector as explained below.

The Ugly

There was 1 stock that decreased by 20% or more, which is my metric for inclusion in this category: CBWTF -20.0%. Auxly Cannabis Group Inc. did not issue any news to provide insight into this steep decline.

Valuation Metric Review

There was a decrease of 7.5% in the “Big Four” (all of which decreased) compared to the prior week when there was an increase of 5.6%. I view this as a cautionary tale regarding the short-term performance of the sector going forward.
 

Recap

All of the 22 stocks in the MCCCI decreased, which underscores the fragility of the sector. There was a decrease of 8.8% in the relative strength index compared to the prior week when there was a decrease of 1.5%. The increasing weakness in all the metrics I use indicate nervous waters exist for the sector. In my view, the bull/bear tug of war regarding Canopy Growth Corporation is the best opportunity of 2022 for option traders. I have advised my private clients as to my thoughts. Suffice it to say that those who “bet” correctly will benefit handsomely but the corollary is equally true. Let us see how this volatile sector has performed at the same time next week, shall we?

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More By This Author:

The Canadian Cannabis Report - Monday, Sept. 12
The Canadian Cannabis Report - Monday Sept. 5
The Canadian Cannabis Report - Monday, Aug. 29