For the trading week ended July 10, my proprietary Canadian Cannabis Company Index (MCCCI) increased by 4.2% compared to last week when it decreased by ~1%. 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 MCCCIs 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’ve said here before, I 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. The survivors will be those companies that can operate profitably when the equilibrium price is established by the supply/demand dynamics.

Based on the first full week of trading in Q3, there is no evidence yet of any mounting pressure on cannabis prices. Let’s look at this week’s good, bad, and ugly stocks.

MICRO The Good

The following two stocks increased by more than 10% which is my metric for inclusion in this category: TerrAscend Corp. (OTCQX-TRSSF) +15.8% and  Green Organic Dutchman Holdings Ltd .(OTCQX:TGODF) +11.1% . TRSSF recently opened its third medical dispensary in PA and on July 8 Forbes raised earnings expectations based on the company’s “impressive growth potential.” I’m putting TRSSF on my “watch list “pending a review of their financials.

PRNewswire reported that TGODFs Ancaster facility has obtained a European Union Good Manufacturing Practice ("EU-GMP") certificate enabling it to commence exports to Germany. I would expect that the company may trade up next week based on this news.

THE BAD

The following stock decreased by more than 10% which is my metric for inclusion in this category: The Valens Company Inc.(OTCQX-VLNCF -14% VLNCF has been the subject of bullish articles at SeekingAlpha recently and the stock traded above $2.00 a month ago. It closed last week at $1.54, which means that it has decreased by ~25% since then. VLNCF will announce Q2 earnings after the market close on July 15. I sent out an alert to my investors regarding my short-term trading thoughts about this high beta stock.

THE UGLY

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

RECAP

The relative strength index increased by 4.6% compared to last week’s increase of 11.2 %

One price spike of note was Canopy Growth Inc (NYSE:CGC)., which is by far the highest market capitalization cannabis company which increased by 5.9%. CGC is a very volatile stock with an erratic trading history which appeals to option traders. Let’s see how this volatile sector has performed same time next week shall we?