Chemistree Technology Escapes Junior CSE Downdraft With Uptrend Still Intact

Benjamin A. Smith
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Although the cannabis market has a miserable time of it this week, Chemistree Technology Inc (CNSX:CHM) (OTCMKTS:CHMJF) (FRA:CM1) price trend remains pointed up—for now. While investors can’t exactly let their guard down, the company will nonetheless take this price action status quo 100% of the time.

For the week, the numbers point to a sector weakness across the board—although not devastatingly so. The benchmark Horizons Marijuana Life Sciences Index ETF (HMMJ) declined $0.62 (↓3.09%), which could have been worse had GW Pharmaceuticals not gained $2.79 (+1.60%) over the past five sessions. GWPH currently constitutes 9.53% of the ETF’s total holdings. HMMJ pierced the $20/share barrier this morning, but could not break high 19’s support levels from mid-April.

Correspondingly, performance in the U.S. Marijuana Index was slightly worse, losing a little less than four percent. After a recent period of noticeable under-performance versus the S&P 500 (↓2.01 for the week, although it felt like more), both cannabis indexes again eroded more than the broad market.The action was best characterized by widespread bid erosion versus hard selling, although individual names such as Tilt Holdings continued to get hit on recent news flow (excluding today’s notable rebound).

When looking at Chemistree Technology’s peer group performance, its “status quo” price action is all the more consoling. Prices ended where they started off—flat—as volume chipped away at an average clip. As is often the case, the market downdraft had an amplifying effect in the junior market, where more illiquid bids rule.

For example, Cannex Holdings dropped ↓21.69%, where Chemistree competes in direct edibles channels in Washington State through their Sugarleaf brand. More distant cannabis relatives trading on the CSE such as Tinley Beverage Co., Cannabis One Holdings and MJardin Group losing ↓9.85%, ↓8.35% and ↓35.71%, respectively.

The fact that CHM avoided decline that engulfed most others is nothing more than an interesting anecdote at the moment. But it could give investors some solace to investors—if not temporary—that sellers are sticking with the name. The daily chart remains in an uptrend, although one large sell order could change things instantly. Still, in a sea of junior cannabis market red this week, Chemistree Technology stands out—even if it’s at the expense of others.

Midas Letter will continue following the story as events warrant.

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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