By Nigam Arora
There was a big bombshell in marijuana land.
Constellation Brands /zigman2/quotes/207737284/composite STZ -0.65% , known for its beer, wine and spirits, is investing about $4 billion in Canadian marijuana company Canopy Growth /zigman2/quotes/200603886/composite CGC -0.16% Constellation paid a whopping 51% premium. So does that mean other marijuana stocks are worth about 50% more than they were before?
Marijuana stocks are highly volatile, and investors need help in properly investing and trading them.
One of the best tools is to look at the X-rays of the popular stocks in the form of segmented money flows. Money flows provide an edge to investors who want to beat the market and lower their risks.
Let’s explore by looking at money flows with the help of a chart.
Please click here for the annotated chart of money flows in 11 popular marijuana and cannabis-related stocks. As a group, these stocks do not move with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.80% , S&P 500 /zigman2/quotes/210599714/realtime SPX +0.82% and Nasdaq 100 /zigman2/quotes/210598364/realtime NDX +0.65% , and popular index ETFs such as /zigman2/quotes/209901640/composite SPY +0.81% , /zigman2/quotes/208575548/composite QQQ +0.61% and /zigman2/quotes/209961116/composite IWM +0.41% . This can provide important diversification. Please observe the following from the chart:
• Momo crowd money flows — those of momentum investors — are extremely positive in Canopy Growth.
• Momo crowd money flows are mildly positive in Constellation Brands. Of interest is that smart money flows — those of professional investors — are negative in Constellation.
• Momo crowd money flows are extremely positive in Aurora Cannabis , Cronos Group /zigman2/quotes/206842762/composite CRON +0.82% and Tilray /zigman2/quotes/209129655/composite TLRY -2.46% . In contrast, smart money flows are neutral in those stocks.
• In Neptune Technologies /zigman2/quotes/207537677/composite NEPT +0.87% , momo crowd money flows are positive but smart money flows are mildly negative.
• In popular marijuana ETF /zigman2/quotes/204332491/composite MJ +0.06% , momo crowd money flows are positive but the smart money flows are mildly negative.
• Among pharmaceutical-related marijuana stocks with the exception of Zogenix /zigman2/quotes/204255718/composite ZGNX -0.12% , money flows are neutral in GW Pharmaceuticals and Zynerba Pharmaceuticals /zigman2/quotes/204500323/composite ZYNE -1.33% .
• Both smart money flows and momo crowd money flows are negative in Scotts Miracle-Gro /zigman2/quotes/200553749/composite SMG +1.31% , which pushed into the cannabis industry via hydroponic equipment and supplies.
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