Below are the companies — Canopy Growth Corp (TSE:WEED) (NYSE:CGC) (FRA:11L1), Aphria Inc (TSE:APHA) (FRA:10E), Sproutly Canada Inc (CNSX:SPR) (OTCMKTS:SRUTF) — and related news events we’re tracking closely for tomorrow’s session.

Canopy Growth

In the after hours session, Canopy Growth buyers provided brief hope that tonight’s price spike was somehow presaging a solid earnings report tomorrow. Alas, heavy volume move appears to have mimicked Tilray’s initial upside fake-out move, after the company announced earnings after the bell. Prices quickly settled back towards the day’s lows.

Tomorrow’s announcement is an important one for the cannabis sector. Not so much that these particular earnings—where post-legalization revenues are still off-balance sheet—matter a whole lot. Rather, we sense the market is seeking that kernel of good news to help reverse the droning sector selling—even if the reprieve is only temporary.

Where exactly that good news comes from is hard to fathom. Traditionally, Canadian LP earnings haven’t moved the needle much outside of the odd outlier result; this earnings season is no exception.

However, Canopy Growth has a history of jolting the sector back to life with announcements nobody sees coming. For a sector mired in post-legalization bear market conditions, investors once again look towards Canopy Growth to pull a rabbit out of its magician’s hat.

Sproutly Canada

How do we know we’re immersed in a bear market? When excellent news delivers adverse reactions in underlying share prices. That’s exactly was happened today with Sproutly Canada Inc.

If case you missed it, the company entered a letter of intent with Global Canna Labs Limited (GCL) to establish a joint venture to formulate and distribute cannabis edibles, beverages, and topical products. GCL has a 25% interest in Zimmer and Company, which has 61 existing products approved by the Jamaican Ministry of Health for import and export. The release was easily the company’s defining news event to date, and validation of its exciting water-soluble APP Technology, which has yet to be deployed at-scale.

Unfortunately for Sproutly Canada, investors took today’s great news as an opportunity to unload their holdings into an enhanced bid. SPR.C tumbled $0.095 to $0.395/share (↓19.39%) on heavy volume. Although the stock had been weak recently—especially with riskier junior issues out of favor—today’s result was nonetheless shocking. It demonstrates that good news isn’t necessarily rewarded, and may in fact be viewed as a prime exit opportunity while the bid remains populated.

Some will argue that GCL isn’t in the same league as Molson Coors Brewing Co. or some major pharma outfit—no argument there. But in context, Sproutly’s JV was a relative homerun for the pre-revenue, build-out stage junior LP. Clearly, today’s news event was a victim of harsh and inopportune timing.

Aphria

After trudging along with the broad cannabis sector, Aphria Inc. experienced a notable de-coupling yesterday afternoon. While it was just a minor divergence at first, the chasm continued on-open this morning, and into the close. As we can see below, Aphria finished about twice as weak as close peer, Aurora Cannabis Inc.

The reasons for the outsized weakness are guesswork at this point. However, we wonder whether the stock’s unresponsiveness to comments made by CEO Vic Neufeld during his recent BNN Bloomberg interview lead some investors to liquidate Aphria’s ‘cannabev put’.

Either way, Aphria shares (CDN) are now sitting on the simple 200-day moving average ($13.68), and breached the 200-day exponential moving average ($13.97) early this afternoon. This was one of those rare sessions where every hourly bar was red, with buyers unable to obtain any traction.

Should the ‘200’ fail, the next level of major support resides at the October 30th post-legalization selloff lows ($12.37).