MACRO

For the trading week ended 4/17/20 my  Canadian Cannabis Company Index (MCCCI) increased  by 3.0%, the first time that it  has increased 2 weeks in a row- albeit marginally 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 industry as a whole. 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 industry. As I’ve said here before, I believe there will be widespread carnage in this sector for the foreseeable future, including but not limited to business failures, consolidation, and a pronounced downtrend in valuation. Let’s look at this week’s good, bad and ugly stocks.

MICRO

THE GOOD

This week 2 stocks gained more than 10%, which is my threshold for this category.  MEDIF gained 13.6% for the week and closed at $1.25. This stock was a former “ugly” stock of the week and I do not attribute much import to this week’s rise, other than it is a good example of the high level of volatility in the cannabis sector. By far, APHA's increase of 12.5% was more notable for several reasons. Jefferies is gung-ho on the stock and Yahoo Finance and Pot Stock News had bullish articles this week on APHA, which is 1 of the sector’s “heavy hitters” Also of significance is that  trading in APHA went  ballistic in the 3 most recent trading days, which I consider  bullish  and closed at $3.60.

THE BAD

OGI decreased 13.8% and closed the week at $1.59. I believe the stock will likely be under more downward pressure going forward, as the recent announcement of OGIs impending reverse stock split is indicative of troubled times

THE UGLY

ACB “earned” the dubious distinction as the week’s “biggest loser” as the stock plummeted 21.6% and closed at $0.69. ACBs market capitalization of $908.1M means that its performance has a profound impact on the MCCCI.

RECAP

The relative strength indicator increased by 3.0 % compared to the overall index which was less than 0.025% of last week- a statistical  dead heat. I attribute this difference to the relatively better performance of the higher market capitalization stocks in the upper quartile of  the MCCCI.  These stocks are less vulnerable to market uncertainty than their less well-capital peers, many of which have low Z scores, which is time-tested bankruptcy indicator. Let’s see how this volatile sector has performed   same time next week shall we?