E The Canadian Cannabis Report - Monday, Oct. 19

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: APHA -19.2%; TGODF -12.5%; NEPT -10.5% and MEDIF -10.1%. Aphria Inc. appears vulnerable for a correction due to recent disappointing revenue numbers. I intend to do more modeling work on the company based on my preliminary assessment after consulting with my private clients.

THE UGLY

There were 2 stocks that decreased by 20% or more, which is my metric for inclusion in this category: BHHKF - 29.6% and ACB - 20.1%. Benchmark Botanics Inc. is among the lowest capitalization MCCCI stocks, and I believe lives in uncertain times. Aurora Cannabis is 1 of the “Big Four” and the company’s recent price weakness is a growing concern. ACB has a YTD decrease of over 90%, which may accelerate option activity for those traders who use this metric as a guidepost for their strategy going forward.

VALUATION METRIC REVIEW

There was a decrease of 5.7% in the “Big Four” compared to the last blockbuster increase of 24.7%. I would note my view of ACB last week was sustained as discussed earlier in this report.

RECAP

The relative strength index increased by 4.3% compared to last week’s 2020 high increase of 25.3%, which was reported incorrectly in the 10/9 report as 22.8% due to an “operator error” (me). My most pressing concern at present is the growing instability of 2 of the “Big Four” MCCCI companies (ACB and APHA) discussed here, and how they (and their cohorts) trade going forward. As a continued caveat to any “Robinhoodies” reading this report, option trading should be left to the professionals. Let us see how this volatile sector has performed shall we?

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William K. 3 months ago Member's comment

Interesting performance of this tightly focused sector. Certainly an education.