Let’s Toke Business Composite Index posted a 2.9% gain last week
The Let’s Toke Business Composite Index posted a gain of 2.9% last week and re-established an uptrend that began with the mid-October announcement that Constellation Brands was investing another CAD $5 billion into Canopy Growth. We said the next few weeks would be important to the cannabis stocks and this is what we were talking about. If we can squeeze out one more week of rising prices, will have broken through the resistance at just over 1,000 on the index and could then be on its way to new highs.
We have also talked about the importance of positive momentum as measured by the LTB Marijuana Stock Momentum Index. Although momentum moved higher last week, it was not quite as vibrant as we would have liked. So again, we must keep an eye on this indicator as we want it provide strong confirmation of an uptrend in cannabis stock prices. Again this can be resolved with a positive week to close out the month and quarter.
The LTB Licensed Producer Composite Index has been the stronger section of the cannabis stocks. But it is now facing a resistance point of its own at around 4,000. Add to this the fact that with a gain of 1.2% last week, it has now underperformed the Composite Index for a second week in a row. So another positive week for the licensed producers where it outperforms the Composite would be excellent confirmation of further upside in the cannabis group.
The Canadian Cannabis Composite Index, published by Davis and Associates Capital Corp. produced a positive return of 5.6% last week. By taking advantage of its daily calculation, we can see the volatility in stock prices has continued. Monday, Tuesday and Thursday were up days last week while Wednesday and Friday posted losses. We use this index to provide a quick intraday snapshot to see what the cannabis group is doing and we find it very useful for this reason.
The LTB Low-Priced Composite Index produced a positive result last week with a gain of 1.7%. However this was still a subpar result compared to the Composite Index. We are not as concerned with this group because we don’t really invest in this sector but we look on it as a key indicator of investor psychology. With the index trading just slightly higher than its 12-month lows, we don’t see signs of “irrational exuberance” yet. But as we have said regularly, we expect to see it before this cycle is over.
Conclusion: We are more than comfortable with the performance of the cannabis stocks at this stage. As we have shown with The Cannabis Report Model Portfolio, a group of well managed stocks can outperform the indexes. This portfolio, for example, has produced a return around three times the averages since inception. The service is structured so followers can use the advice to make changes to their own portfolios. So if you need help with your portfolio of cannabis stocks, see below.