Canadian marijuana stocks have been hot and we are keeping a close eye on how this rally continues.

Canadian licensed marijuana producers have been hot investments over the last month and we are favorable on this rally. We have seen tremendous capital enter the market and LPs have seen a significant increase the average daily trading volume on a month-over-month basis.

A lot of this volume has been on the buy side and this has caused momentum to surge higher. Currently, Canopy Growth (TWMJF), Aphria (APHQF), Emblem (EMMBF), Cronos (PRMCF), Aurora (ACBFF), Organigram (OGRMF), and Supreme Pharmaceuticals (SPRWF) are trading at overbought levels.

A Very Bullish Trend

To help explain how strong trading volume has been for Canadian licensed medical marijuana producers, we have listed the average volume from leading Canadian cannabis firms over the last 10 days and compared it to the last 30 days.

Canopy Growth – 2.33 M vs. 1.48 M

Aurora Cannabis – 2.07 M vs. 1.45 M

Organigram – 642k vs. 492k

Aphria – 1.7 M vs. 1.09 M

Emblem – 352k vs. 203k

Cannimed – 59.6k vs. 40k

Supreme – 960k vs. 532k

Invictus – 539k vs. 242k

Emerald Health Therapeutics – 441k vs. 296k

When you look at the difference between the average daily volume recorded during these time periods, the change has been significant.

Although these numbers tell a good story, they do not tell you everything that you need to know. For instance, trading volume over the last week has been significantly stronger than it has been during the last two weeks, so we expect to see the increase in volume to become even more pronounced over the coming month.

2017 is Looking a Lot Like 2016

We are favorable on this trend and look back to the fourth quarter of 2016 to find a similar trend. If this rally is anything like what we saw last year, this could just be the start of a big cycle turn. One of the most important technical indicators we monitor is the Relative Strength Index (RSI), which measures a stock’s momentum.

As buying volume increases, momentum or RSI trends higher and this is a bullish indicator for stocks. If you look at this metric for Canadian licensed producers, there is a lot to be excited about.