For the trading week that ended September 23, my proprietary Canadian Cannabis Company Index (MCCCI) decreased by 11.8% compared to the prior week when it decreased by 8.0%. 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 5 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: ACB -16.8%, TLRY -14.7%, OGI -14.7%, VLNS -11.4%, and HEXO -10.5%. Aurora Cannabis Inc. and HEXO Corp. are repeaters from the prior week’s “bad” list.

The Ugly

There were 4 stocks that decreased by 20% or more, which is my metric for inclusion in this category: NEPT -32.2%, CBWTF -25.0%, ALEAF -20.0%, and TGODF -20.0%. Auxly Cannabis Group Inc. is a repeater from the prior week’s “ugly” list.

Valuation Metric Review

There was a decrease of 12.6% in the “Big Four” (all of which decreased) compared to the prior week when there was a decrease of 7.5%. This reinforces my bearish outlook on the sector going into Q4.

Recap

1 of the 22 stocks in the MCCCI increased, deepening the caution regarding the sector. There was a decrease of 13.0% in the relative strength index compared to the prior week when there was a decrease of 8.8%. The double-digit losses in the aforementioned 3 metrics is further evidence that the sector is under pronounced price pressure. Canopy Growth Corporation, which I called “the best opportunity of 2022 for option traders” last week, decreased 8.4%. CGC rallied 4.4% in the most recent trading session, and where it may trade in the short-term is a coin toss, especially since it is a very high beta stock. Let us see how this volatile sector has performed at the same time next week, shall we?

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