For the trading week ended August 30, 2024, my proprietary Canadian Cannabis Company Index MCCCI decreased by 10.4% compared to the prior week when it decreased by 5.4%. The index consists of 14 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?

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 3 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: TSNDF -19.0%, CGC -16.1%.and TLRY -11.4%. TerrAscend Corp. and Canopy Growth Corporation were also “bad stocks” in the prior week.

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 an 11.1% decrease in the “Big 4” (all of which decreased for the 2nd consecutive week) compared to the prior week when there was a 5.7% decrease. In my view, this is a major tell that the sector is deeply mired in bearish territory. The stock-price based metric decreased by 12.5% compared to the prior week when it decreased by 5.7%.

Recap

There was a 1.6% decrease in the relative strength index compared to the prior week when there was a 1.6% increase. None of the 14 MCCCI stocks increased compared to the prior week when 2 stocks increased. Based on the totality of negative indicators, I believe that a DEFCON 1 alert is appropriate. Let us see how this volatile sector has performed at the same time next week, shall we?

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