[Free Chart of The Week] Pot Stocks Come Full Circle

JC Parets
December 26, 2018

From the desk of Tom Bruni @BruniCharting

From a public markets perspective the Marijuana Industry is small, so small that it could go to zero tomorrow and nobody would notice. In late August we started covering the space after receiving a lot of reader requests, so as we close out 2018 I wanted to share one chart that perfectly summarizes the boom and bust it's witnessed over the last two quarters.

The table below provides the average and median Daily Volume and Market Cap values of the Canadian ETF $HMMJ's holdings during various points over the last few months. Within each box we've noted the number of stocks meeting the 500,000 share Average Daily Volume and $500 Million US Dollar Market Cap thresholds that we use to filter out which stocks are in play for institutions and which aren't likely to be touched.

Click on table to enlarge view.

With a quick glance you'll see the the main takeaway is that average/median trading volumes and market-caps surged in September and October as the Industry received mainstream attention and was trending higher, however, they're now back to essentially where they started in August.

While average trading volume and market cap is still higher due to the impact of the group's larger names, median market cap is nearly 25% lower and trading volumes, while still higher, are a fraction of what they were when we analyzed them during September's "mania".

The last stock left in a clear uptrend, Innovative Industrial Properties, is now breaking down after meeting our upside objective in November. With many of this ETFs holdings making new lows or in trading ranges at best, the fact that this leading stock is breaking down does not inspire confidence in the group's ability to trend higher. Quite the opposite in fact.

Click on chart to enlarge view.

Maybe 2019 will be a better year for this Industry's stocks, but for now there's little evidence that we want to be involved here on the long side. With that said, we're open-minded and will be watching to see how these charts develop in the coming weeks and months.

Premium Members can access our full Marijuana Industry Workbook for weekly chart updates on all of $HMMJ's holdings.

If you'd like access to that workbook and more premium research, consider joining our community by starting a 30-day risk-free trial or signing up for our "Free Chart of the Week".

Thanks for reading and let us know your thoughts!

Allstarcharts Team

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