It has been a solid year since I exited much of my marijuana stocks back in March of 2019 and decided to go short. I did not go short because marijuana stocks lost their luster or appeal. It was because every year since 2014 I have exited in March and traded these companies into the summer looking for a signal to load up for the new year ahead.
In the summer of 2019, we did not get that, in fact, it seemed we just got headlines that crushed marijuana stocks sentiment with a bonus of banks shutting off the money to a lot of cannabis companies. As someone that takes sentiment into consideration for momentum and or “cult” marijuana stocks, this was a problem, and since March of 2019 marijuana stocks became just a trade and eventual fade.
This current marijuana stocks rally has a different feel to it, mainly because the once darling of the cannabis industry Aurora Cannabis’s (NYSE: ACB) has actually begun to have a hard bull rally since doing a 12-1 reverse split last Monday (5/11/2020).
Truth be told, I was very negative about Aurora Cannabis’s (NYSE: ACB) reverse split because in my opinion they rarely work, and for a few days I was absolutely on point as Aurora went from $7.50 post-split all the way back down to $5.60; it did not look good until a glimmer of hope came through via their earnings.
Aurora Cannabis’s (NYSE: ACB) numbers were good considering everything they have been through with revenue increasing and cash burn decreasing. I won’t get into other details because at this point Aurora Cannabis (NYSE: ACB) is trading above $17 and on very high share volume and in my opinion, that’s the only thing that matters.
Pre-Reverse split Aurora had about 1.3 billion shares and post-split they have about 108 million give or take. On Friday they traded 102m which in my opinion is both insane and important given the short position that was in there that as of right now and in my opinion seems to have them (“the short sellers”) trapped into a position where they could lock up the float. If the float gets locked by some miracle Aurora is going to finally exact a little more revenge on short-sellers, but it’s a long shot and you will be better served taking advantage of this volume and price movement while it’s here to clean up your averages and just take profit. The move today is a combination of momentum from Friday, big macro movement from Jerome Powell being on 60 Minutes last night as well as Canadian market being closed for Victory Day. Make Hay while the sun shines, because tomorrow could get a rug pull. So far ACB has done something for every Cannabis stock; put marijuana stocks back on your stock radar!
In addition to Aurora Cannabis’s (NYSE: ACB), Cronos Group (NASDAQ: CRON) was $4.66 on Wednesday (5/13/2020), now it’s just under $6, Canopy Growth Corporation (NYSE: CGC) was $13.50 now its $16.50 three days later. MSO’s like Trulieve Cannabis (CNSX: TRUL) and Curaleaf (CNSX: CURA) are also running.
In my opinion, there will be other rallies in the cannabis sector but let us not repeat the same mistakes from before. Give marijuana stocks and yourself a clean slate. This is a new day and a new time. There have been many lessons learned and I feel strongly that we are all better equipped to profit into the start of Cannabis 2.0!
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