HMMJ Attains Record Closing High; Pinnacle Within Reach Tomorrow

Benjamin A. Smith
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The Horizons Marijuana Life Sciences Index ETF (TSE:HMMJ) is poised to reach record highs tomorrow, as FOMO buying continues to predominate the market. The last time the market was here, ex-rebalancing, Cannimed Therapeutics Inc. and Newstrike Brands Ltd. were on the verge of linking up. After three nasty bear market swoons (one in each season: winter, spring, summer) the market is back to the January highs. We look at what happens next.

Flying off the radar with all the individual cannabis market action today, HMMJ cemented a new all-time closing high. The benchmark ETF finished the day ↑$1.29 to $24.63—thirty cents above the previous high water mark set on January 9, 2018 ($24.33). Even more impressively, it did so on impressive rebound volume (3rd highest since August 15th), closing just pennies from the day’s high. It was one of those sessions were every dip was bought, with bulls seizing control every step of the way.

With a new closing high in place, the stage is set to test the all-time high ($25.56) at some point tomorrow. That moment could arrive sooner rather than later, as after hour moves in Canopy Growth Corp. (52.88 +0.99, 1.91%) and Cronos Group Inc. (11.95 +0.39, 3.37%) are already pointing to a higher open. Both stocks appear to be playing follow-the-leader to Tilray Inc., which is up another (173.00 +18.02, 11.63%) in the evening session. The latter is running on a Bloomberg article titled World’s Most Valuable Pot Company Envisions $100 Billion Future, disseminated before the closing bell. The FOMO knows no bounds at this point. 

Where the market goes in the interim here is uncertain. The power of this current bull impulse has made mincemeat out of usually-sound technical sell signals. Prices are extended in many names, but short of overbought levels after last week’s safety valve selling provided relief. Some individual mid-major stocks are looking tired here, but majors like Aurora Cannabis Inc. and Canopy Growth still have energy behind them.

HMMJ Top Holdings, as of September 17, 2018

Security Name Weight
AURORA CANNABIS INC . 16.40%
CANOPY GROWTH CORP . 15.23%
APHRIA INC . 11.16%
GW PHARMACEUTICALS PLC . 7.44%
SCOTTS MIRACLE-GRO CO/THE . 6.86%
CRONOS GROUP INC . 5.89%
GREEN ORGANIC DUTCHMAN HLDGS . 4.70%
HEXO CORP 4.58%
CANNTRUST HOLDINGS INC . 3.48%
ORGANIGRAM HOLDINGS INC . 2.57%

And then there’s Tilray, which is living proof the internet bubble only went into hibernation for two decades. At its closing after hours print of $173.00/share, Tilray is now valued at $22.536 billion dollars fully diluted—about twice the size of Aurora Cannabis. Although TLRY isn’t included in HMMJ’s holdings at this juncture, it’s a primary catalyst driving the FOMO mindset. After all, if Tilray is worth this much, why isn’t cannabis stock XYZ worth that much. That’s essentially the mindset driving the sector at the moment. Anything with a pulse is receiving heavy inflows, a full month-plus after Canopy inked the deal that would define the sector. Amazing.

Thus, an HMMJ re-test of the January 9th all-time high is but a formality heading into tomorrow. We await to see whether $25.56 provides any resistance whatsoever, or whether it’s yet another glass ceiling ready to be shattered.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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