It appears investors have squared off discretionary positions leading into the historic Bill C-45 vote scheduled for later today. After record, or near-record, on-open volume on several key bellweather stocks, the market is grinding to a standstill. We examine further.

The evidence comes way of massive opening volume today, and subsequent decline through the late morning. This clearly suggests retail and institutional traders have largely liquidated excess discretionary positions prior to the final Bill C-45 voting outcome, lest they be caught in a cascading sell-the-news event. The volume profile of several leading Canadian cannabis companies clearly illustrates this point:

Canopy Growth Corp.

Aurora Cannabis Inc.

Cronos Group Inc.

The common denominator in all these instances is twofold.

First, it appears investors are lightening positions ahead of Bill C-45’s final vote—which is expected to pass. With the cannabis sector having rallied roughly twelve percent since June 5, investors are locking-in profits. Every major issue sold off precipitously within the first half hour, rebounding to various degrees.

The glass-half-full view is that such profit taking was inevitable, and doesn’t appear overly extreme. The second ‘positive’ aspect is that selling appears to be limited in scope. Stocks have rebounded in all cases, limiting downside drift (although that does appear to be accelerating as the afternoon wears on).

The second takeaway is that volume has collapsed after the first hour. Buyers and sellers are clearly entrenched in a wait-and-see approach, as the direction of the market remains unclear post Bill C-45 passage. Investors must also contemplate the black swan scenario that Bill C-45 gets struck down, although that appears exceedingly unlikely.

Currently, the Midas Letter Canadian Cannabis Index is off a modest ↓3.33%, which is really just your garden variety losing session. With very little buyers in the market, it remains to be seen whether selling accelerates with a lack of firm bid in place.