With Volume Declining Are We Heading Into A Bear Market Ahead Of Legalization?
TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.
The cannabis sector got off to a hot start this year as many investors look to capitalize on the burgeoning Canadian cannabis industry prior to the legalization of recreational marijuana, which is expected to occur before July 1st.
Although this opportunity is very exciting and represents a once-in-a-lifetime event, trading volume is declining and this is something that investors need to monitor. This trend is nothing new and it is something that we have watched happen every year since we starting covering the cannabis sector in January 2014.
We are monitoring this trend and expect this year to be different as Canada plans to open a legal recreational marijuana market. Once the government provides an update on this plan, we expect to see this trend reverse and volume strengthen.
Today, we have highlighted five leading Canadian licensed marijuana producers that have recorded a significant drop off in trading volume and that cannabis investors should be watching.
Canopy Growth Continues to Deliver
Over the last month, Canopy Growth (WEED.TO) (TWMJF) has rallied approx. 15% and the marijuana producer continues to execute on all cylinders. During this time, Canopy’s average trading volume dropped approx. 15% when compared to its average over the last quarter and we are monitoring this trend. Momentum has been trending lower and we remain bullish at current levels.
Canopy Growth is well positioned to capitalize on Canada’s recreational marijuana market and has secured supply agreements with several provinces. The marijuana producer is levered to several emerging medical marijuana markets (Australia, Germany, Chile, Denmark, and more) and has the largest market share in Canada. Last year, Constellation Brands (STZ) made a $245 million investment in Canopy Growth an investors need to keep an eye on this cannabis stock.
Cronos Group Trades Higher After Moving to the Nasdaq
Although Cronos Group (CRON.V) (CRON) has been a top performer during the last quarter (up 130%), the last week has been rough and the shares have fallen approx. 15%. This pullback follows a significant rally that took place after the company commenced trading on the Nasdaq.
After Cronos announced that it would commence trading on the Nasdaq, volume spiked higher and the shares were trading near overbought levels. When compared to the last month, average daily trading volume during the last week plunged, falling almost 65%. We are monitoring this decline and remain bullish on the shares. Yesterday, PI Financial raised its price target on the marijuana producer to $13 from $10 and investors need to keep an eye on this one
Aurora Cannabis Trading Volume Falls 60%
Aurora Cannabis (ACB.TO) (ACBFF) continues to be one of the most followed Canadian marijuana stocks and we are monitoring the recent decline in volume. This decline has been significant and Aurora’s average trading volume during the last week is almost 60% lower than the average volume during the last quarter.
This is a massive decline in volume and the shares have edged higher during the last week. We are closely watching this trend and will monitor how Aurora trades from here. We are favorable on Aurora due to the improving fundamentals, the strategic investments and acquisitions, the fully funded growth initiatives, the leverage to international markets, the management team, and strong balance sheet
MedReleaf Trades Lower as Volume Plunges
MedReleaf (LEAF.TO) (MEDFF) has been trending lower and the shares are down more than 7% in the last week. During this time, trading volume has dried up and we are monitoring this trend closely. During the last week, trading volume has fallen by more than 60% when compared to the average daily volume during the last quarter.
Although MedReleaf has been trending lower, the marijuana producer continues to execute and this has caught the attention of several broker-dealers. The company has received upgrades from firms like Canaccord Genuity and PI Financial and we remain bullish on the long-term outlook. MedReleaf is focused on increasing production capacity, building a brand, and entering new markets. We are favorable on this focus and investors should be monitoring the shares.
Aphria has Fallen Approx. 25% in 2018
Aphria (APH.TO) (APHQF) has been laser focused on execution and has made several significant announcements in 2018. From more than tripling approved production capacity to making strategic acquisitions, the marijuana producer has been executing flawlessly and growing through organic and inorganic growth initiatives.
Although the fundamental story continues to improve, Aphria has been under pressure in 2018 and the shares are down 25% during this time. We are monitoring this weakness as well as a recent decline in volume. When compared to the average trading volume during the last month and quarter, Aphria’s average trading volume during the last week has fallen by more than 20%. We are favorable on Aphria and expect to see the Nuuvera (NUU.V) acquisition to close in the coming weeks. We consider Aphria to be a long-term player and investors need to keep an eye on this stock.
Disclosure: This report was authored by and is property of Technical420.All information and data relied upon in drafting this report is publicly available.The author believes and considers its ...
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