Editors' note: This article discusses one or more penny stocks and/or microcaps. Such stocks are easily manipulated; do your own careful due diligence.

For the trading week ended November 6, my (proprietary) Canadian Cannabis Company Index (MCCCI) increased by a mind-boggling 32.8% compared to last week when it decreased by 4.2%. The index consists of 25 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. The 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. As I have said here before, I also believe there will be a pronounced reset in this sector, likely in Q3 or Q4 of this year including but not limited to business failures, consolidation, and a significant downtrend in valuation. My mid-year report showed that the MCCCI had decreased by 36% YTD, which may be a guidepost for the rest of 2020. The survivors will be those companies that can operate profitably when the equilibrium price is established by the supply/demand dynamics. Based on the 1st 5 weeks of Q4, it appears more likely that the sector will experience continued frothiness going forward, especially given the outcome of the U.S. presidential election. Now let us look at this week’s good, bad, and ugly stocks.

THE GOOD

There were 17 stocks that increased by more than 10%, which is my metric for inclusion in this category: HEXO +47.4%, CRON +42.0%, ACB +41.7%, TGODF +40.5%, OGI +37.5%, EMHTF +30.2%, CBWTF +30.0%, TRSSF + 29.2%, CGC +25.1%, SPRWF +22.6%, APHA 22.2%, WDDMF +22.1%, ZBISF +16.8%, RDDTF +16.0%, VLNCF +11.5%, VVCIF +10.3%, and ALEAF +10.1%. 

THE BAD

There were no stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category:

THE UGLY

There were no stocks that decreased by 20% or more, which is my metric for inclusion in this category:

VALUATION METRIC REVIEW

There was a record 2020 increase of 35.0% in the “Big Four” compared to the last week’s decrease of 4.0%. I attribute the “happy days are here again” euphoria for the sector is due to how well pro-marijuana legislation was supported in last week’s election. And since just prior to the submission of this article, the stock market opened up over 1,500 points higher due to positive news about COVID-19, I fully expect upward momentum to continue. Investors should tread especially lightly given the current environment.

RECAP

The relative strength index increased by 10.9% compared to last week when it decreased by 4.8%. How long the rising tide continues to lift (almost) all boats in the MCCCI is not something I am not comfortable speculating on at present. Let us see how this volatile sector has performed at the same time next w