The cannabis sector has seen an uptick in volume this week, which has helped many of the stocks to begin to rebound after almost a full year of steady decline. High volume indicates a high level of trader and investor interest, which means those who have left the sector may be finding cannabis stocks attractive again.
Aurora Cannabis Inc (NASDAQ: ACB), Canopy Growth Corporation (NASDAQ: CGC), Cronos Group, Inc (NASDAQ: CRON) and Tilray, Inc (NASDAQ: TLRY) are trading down 61%, 76%, 47% and 81%, respectively, from their February highs. If history repeats, however, the cannabis sector may start to heat up again toward the end of the year, as it did in 2020 and the early part of 2021.
As traders and institutions begin to drive the price of a stock up the (mostly) institutional traders who have an open short position are forced to cover. This drives the price of the shares up further and is known as a short squeeze. If stocks within the sector continue to see upwards momentum, there is a possibility a short squeeze could play out on these four stocks due to their underlying statistics.