The cannabis sector had some relatively large news come across the wire today. While we did not see the needle move much in the sector, we are seeing at least one stock benefit greatly today. Let’s take a look and see what other names that can also move in conjunction in the near term.
It was announced that WeedMD Inc. (OTC: WDDMF) (TSX: WMD) and Hiku Brands Company Ltd decided to merge their companies together. Shareholders of WDDMF will receive 1.4185 shares of Hiku for every share they own. This merger puts together two companies on the up and up. With an ever growing portfolio of strains and an established name in the industry in WDDMF already in place, this can help accelerate growth in the industry and now make Hiku a major powerhouse in the retail sector.
The move in WDDMF maybe limited but it surely is moving nicely today. There could still be a short term opportunity on any pullback to the $1.50 price range as buyers have been trying to buy up the stock all day. Any progression past the $2.00 mark could showcase a potential breakout opportunity. Alas this will be a very short term play on a swing trade basis. The longer term potential for yield will be in Hiku. They are based on the CSE/CNSX (Canadian Securities Exchange) and available via OTC in the US under the ticker symbol DJACF. For the longer term play in DJACF, the critical price to hurdle past will be $2.50. The all time high price in Hiku is $3.88 and I suspect we could see a possible retest of that price range.
The news is pretty solid for both companies and this merger is very beneficial to their long term vitals. The merger brings in established pipelines and highly desired genetics along with the ability to grow crops rapidly. The new company will also now be listed on the TSX exchange upon regulatory approval. The streets and investors alike seem to love this deal as both ticker symbols are trading on greater than normal volume. We have already exceeded the 50 day daily volume average and could easily see inflow sustained over the next few days.
GW Pharmaceuticals ( Nasdaq: GWPH) was halted premarket pending news ahead of the FDA Panel decision. The vote came back unanimous in support of the CBD drug Epidiolex. The stock came off halt much higher but did drop quickly from profit takers. The weight of the drop did affect names like CARA and INSY, but did not cause too much of a shake out. I will watch 2 specific price levels in GWPH for a short term buy side trade. The $130.50-$130.00 mark and the $125-$124 mark. These levels have shown institutional activity as of late and can be great opportunities in the near term if we see technical support come into play. Couple that with the 50 and 200 day simple moving averages just below the $120.00 price means we have some safety nets below the prices of interest. If GWPH can get final approval from the FDA on June 27th of this year, it can open the floodgates for more companies and more research into the benefits of CBD. That will only help the sector grow and that growth can accelerate quickly this year. This is a must watch for the CBD pharma industry. Cara Therapeutics Inc (Nasdaq: CARA) and Insys Therapeutics Inc(Nasdaq: INSY) could also benefit greatly upon approval.
Find out about more of Charles Moon’s marijuana stock analysis at ProsperTrading.com
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