Editors' note: This article discusses one or more penny stocks and/or microcaps. Such stocks are easily manipulated; do your own careful due diligence.

For the trading week ended November 13, my (proprietary) Canadian Cannabis Company Index (MCCCI) decreased by a de minimis 1.2% compared to last week when it increased by a mind-boggling 32.8%. 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 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. As I have said here before, I also 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. My mid-year report showed that the MCCCI had decreased by 36% YTD, which may be a guidepost for the rest of 2020. The survivors will be those companies that can operate profitably when the equilibrium price is established by the supply/demand dynamics. Based on the 1st 6 weeks of Q4, it appears more likely that the sector will experience continued frothiness going forward, especially given the outcome of the U.S. presidential election. Now let us look at this week’s good, bad, and ugly stocks.

THE GOOD

There was 1 stock that increased by more than 10%, which is my metric for inclusion in this category: CBWTF +41.4%. Auxly Cannabis Group Inc. is a $0.32 stock which rose 30.0% the prior week on no company news. Readers may find this 11/14/20 article which calls the company a “hot marijuana stock” of interest.

THE BAD

There were 2 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: HEXO -16.3% and VVCIF -11.2%.

THE UGLY

There were 2 stocks that decreased by 20% or more, which is my metric for inclusion in this category: OGI -31.6% and ACB -27.7%. I expect further downward price pressure on these large-capitalization stocks, and I have advised my clients accordingly.

VALUATION METRIC REVIEW

There was virtually no change in the “Big Four” compared to last week’s historic increase of 35.0%. However, in my view, it is noteworthy that 7 of the 8 highest capitalization MCCI traded lower post-election and positive legislative outcomes.

RECAP

The relative strength index decreased by 6.9% compared to last week when it increased by 10.9%. I consider this a substantive change in sentiment for the MCCCI portfolio going forward which may be dissipated somewhat by today’s positive COVID-19 vaccine news. Let us see how this volatile sector has performed at the same time next week shall we?