The final week of the year for cannabis stocks was a positive one. With all three of NICI’s exclusive indexes trending upward, it should give cannabis investors plenty of optimism to start 2019.
Call it the “Santa Claus Bounce.”
Or call it an overdue correction for the best-positioned industry in all of investing.
Or call it a bump from some positive legislative development both domestically (the legalization of industrial hemp through the presidential signing of the 2018 Farm Bill) and internationally (Israel opening up to cannabis exporting and Southeast Asia seeing its first nationwide medical marijuana legalization).
However you want to slice it, the final week of the year for cannabis stocks was a positive one and should give us all optimism on this, the first full trading day of what is going to be an exciting and fast-paced 2019. It was a good week across the board, as well – the S&P 500 Index showed one of its best weeks in months, with a 6.62% increase from December 24 through the end of New Year’s Eve trading.
That said, two of our three proprietary indexes here at the National Institute for Cannabis Investors – the NICI 50 and the NICI Wellness Index – significantly outperformed the S&P. The third of our exclusive metrics – The NICI U.S. Index – wasn’t far behind either.
And trading on Monday suggested the positivity wasn’t wearing off quickly.
Let’s take a look at the Institute’s indexes and who some of the big winners heading into 2019 are…
Best-Performing NICI Index Gained Nearly 10% in Year’s Last Week, Going Into 2019 with a Bang
As a quick reminder about our three indexes, one of our first goals when forming the Institute was to pick the industry-best metrics to track the cannabis stocks trading publicly on the New York Stock Exchange, Nasdaq, Toronto Stock Exchange, Canadian Securities Exchange, and on U.S. over-the-counter (OTC) markets.
My research team and I realized that we needed to build our own from the studs up. So we created the NICI 50 Index to include the largest 50 publicly traded firms by market capitalization, the NICI Wellness Index for cannabis companies primarily focused on deriving pharmaceuticals or health-related products for the human endocannabinoid system, and the NICI U.S. Cannabis Index that is composed of only domestic stocks.
Again, the last few days of trading were strong.
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NICI Wellness was up 8.9%. The biggest mover of that category – and cannabis, in general – for the week was Axim Biotechnologies. It put up a 40.98% gain in just four trading sessions.
The NICI 50 was up 7.6%, with its best individual win coming from Golden Leaf Holdings LTD. It was up 35% between December 24 and the close of trading on December 31.
The U.S. Index was respectable in its own right, with a 4.78% pushed by Marimed Inc.
Now, before you run out to buy any of the three stocks I just mentioned, I would give you a word of caution. None of these are particularly highly rated in our exclusive NICILytics ratings system, and two of the three are penny stocks known for some pretty volatile swings.
But, more importantly about all three indexes was that several other top performers – those with the second or third largest gains in the last week of 2018 – are among the best companies in the industry.
In fact, three of these stocks are already cornerstone picks in our members-exclusive Cannabis Investor’s Report portfolio. And they have a lot of room to run from here.
And, as I hinted early, the three indexes started off strong today as well.
More than three-quarters of the way through the first 2019 trading day, each was up by at least 6.2% for the session.
So what drove these positive gains on which many have been waiting? It’s actually not simply one factor…
Legislation, Rationality Driving Hot Cannabis Stock Gains to Start 2019
A good bit of the latest rebound – one that I think should extend for quite a while here to open 2019 – was a matter of inevitability. When stocks in other industries tanked in parts of November and early December, there was plenty of collateral damage. Even the better-positioned industries and some great companies temporarily got dinged as a result.
The snap-back was inevitable. And things will look even better as some political duels come to a conclusion – and they will – and as the most pro-cannabis U.S. Congress in the history of the republic comes into power.
Remember, we left off the end of the legislative session with no fewer than 70 cannabis reform measures active in Congress, and many of them were bipartisan. President Donald Trump, now freed from legal cannabis’ biggest opponent in former Attorney General Jeff Session, has already signed the 2018 Farm Bill that included industrial hemp legalization and said he would sign another prominent piece of cannabis legislation giving states the right to choose its level of legality for themselves (the STATES Act) once it gets to his desk.
This continuing momentum will push our indexes far more than they were during the final days of 2018, by comparison.
Now, I also just mentioned the Farm Bill. That retailers nationwide now have clear guidance that they can sell hemp-based CBD products – ones with none of the psychoactive properties from the cannabis plant (THC) – will be a boon for companies already in that space or gearing up to enter it.
Yet other stocks were helped collaterally from news of the most recent mergers and acquisitions, or mere attempts, as well as some pretty widespread rumors that some strong cannabis companies were considering uplisting on to more notable and more liquid stock exchanges early this year. I’ll get more into that in my latest alert for Cannabis Investor’s Report members this week.
All told, we’re starting 2019 in a bit of a sweet spot as cannabis investors.
Thanks for being an important part of the National Institute for Cannabis Investors,
Executive Director, National Institute for Cannabis Investors
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30 responses to “Cannabis Stocks End 2018, Start First Day of 2019 on a Hot Run”
January 02 2019