E The Canadian Cannabis Report- Monday, May 3

For the trading week ended April 30, my proprietary Canadian Cannabis Company Index (MCCCI) increased by 2.1% compared to the prior week when it was virtually unchanged. 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. 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. 

Image by Herbal Hemp from Pixabay

The Good

There were 4 stocks that increased by more than 10%, which is my metric for inclusion in this category: HEXO +18.3%, ZBISF +15.2%, VLNCF +14.8% and TGODF +14.1%. The recent price spike of Hexo Corp. and Zenabis Global Inc. are likely related to optimism regarding their proposed business combination. The Valens Company Inc. is a repeater from last week and appears to be gaining traction due to their recent expansion into the Yukon territory. The Green Organic Dutchman Holdings Ltd. issued a press release on 4/29/21 which had a bullish tone.

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. There was a de minimis decrease of 0.5% in the “Big Four” compared to the prior week when there was also a decrease of 0.5%, which is quite a statistical anomaly.

Recap

There was an increase of 2.2% in the relative strength index compared to the prior week when there was a decrease of 2.9%. I interpret the overall performance of the MCCCI this week as more evidence that a “reversion to the mean” scenario is on the horizon. Let us see how this volatile sector has performed at the same time next week, shall we?

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