The marijuana stock market has been hot and we are keeping a close eye on how this rally continues.

We recently have become even more focused on the Canadian marijuana market and the opportunities within it. The reason for this increase is simple.

From a momentum standpoint, 2017 is starting to look a lot like 2016…

Although marijuana stocks have been on fire, the sector recorded mixed movements yesterday and we are favorable on this pullback. Today, we highlighted two trends that investors need to be aware of.

Canadian LPs Trade at or Near Overbought Levels:

Canadian licensed marijuana producers have been hot investments over the last month and we are favorable on this rally. We have seen a lot of 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), and Supreme Pharmaceuticals (SPRWF) are trading at overbought levels. Organigram (OGRMF), Cronos (PRMCF), Aurora (ACBFF), and Emblem (EMMBF) are trading right below overbought levels.

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.

Nasdaq Traded Biotech Stocks Continue to Trade Volatile

The recently reported clinical trial results from Zogenix (ZGNX) have shaken the biotech cannabis sector.

Last week, Zogenix announced that ZX008, low-dose fenfluramine hydrochloride, reported a 64% reduction in seizures for patients with Dravet syndrome. The biotech firm said that the study met its primary as well as its secondary objectives.

This data came as a surprise to GW Pharmaceuticals (GWPH) and Zynerba Pharmaceuticals (ZYNE). The biotech firms are focused on the same indication which caused the market to respond in a very volatile manner.

We expect to see volatility remain elevated over the near term and will keep an eye on how these cannabis biotech stock firms continue to trade.