MACRO

For the trading week ended 4/24/20 my  Canadian Cannabis Company Index (MCCCI) increased  by 3.0%, which is the same % increase as last week This is the 3^rd week  in a row  that the Index has not decreased, and may indicate that we are approaching equilibrium  in the sector as a whole. The MCCCI 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. But the recent trend appears to suggest that for now the market is absorbing the oversupply of product fairly well. Let’s look at this week’s good, bad and ugly stocks.

MICRO

THE GOOD

This week 3 stocks gained more than 10%, which is my threshold for this category.  ALEAF was at the head of the class, and the stock gained 20% for the week and closed at $0.31. Quite frankly, it’s hard for me to get excited for a $86.8M market capitalization stock, as the volatility of pink sheet stocks is legendary. TRSSF gained 15.7% and closed at $2.06. The stock has traded up 4 days in row, capped off by more than  a 7%  gain on  4/24/20. FLWPF gained13.6% and closed at $0.47.

THE BAD AND THE UGLY

There were  no stocks in the MCCCI  that lost more than 10%, which is my threshold for this category.  APHA declined 1.7% and closed at $3.54 for the week. However, since it has one of the highest market capitalizations in the MCCCI, it had a pronounced effect on the Index. APHA was 1 of 2 stocks that earned “good” status last week; this form reversal once again is another example of volatility in the sector.

RECAP

The relative strength indicator increased by 3.0 % compared to the overall index which increased an impressive 14.4%. I attribute this significant difference mainly to the fact that 4 of the 5 highest market capitalization stocks in the MCCCI increased for the week. Let’s see how this volatile sector has performed same time next week shall we?