Oversold Pot Stock Catches a Lift

CTST is trading firmly higher today after a sharp correction to start the week

Deputy Editor
Sep 19, 2019 at 3:25 PM
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Stocks are pacing for a mixed finish this afternoon, with the Dow erasing early gains driven by Microsoft (MSFT) and upbeat economic data. Three other stocks on the move today are healthcare names Provention Bio Inc (NASDAQ:PRVB) and India Globalization Capital, Inc. (NYSEAMERICAN:IGC), as well as marijuana issue CannTrust Holdings Inc (NYSE:CTST). Below, we'll look at what's moving the shares of PRVB, IGC, and CTST. 

 PRVB Stock Plummets on Public Stock Offering

Provention Bio announced after yesterday's close that it would be selling 5 million shares of its common stock for $8 each -- a roughly 17% discount to last night's close -- in order to raise $40 million. Amgen (AMGN) pitched in, purchasing 2.5 million shares in a concurrent private placement at the offer price as part of a collaborative agreement. PRVB is eyeing its lowest close since gapping higher in mid-June, down 12.8% at $8.41. 

While the security found its way on to the short sale restricted (SSR) list with today's plunge, shorts have been piling on recently. Short interest shot up 65.8% in the last two reporting periods. Now, the 2.4 million shares sold short represent 9% of the stock's available float, or four times PRVB's average daily volume. 

Alzheimer's Drug Nod Lifts IGC Shares 

The shares of India Globalization Capital are up 6.5% at $1.15 after its experimental Alzheimer's formulation IGC-AD1 was approved by for a mid-stage study by the Institutional Review Board (IRC) in Puerto Rico. The penny stock surged to an eight-week high of $1.30 earlier before paring gains, but is still poised to close north of a recent ceiling at its descending 40-day moving average. 

IGC has been struggling on the charts since its mid-June bull gap and subsequent intraday spike just atop the $2.40 region. The penny stock is still down 45% since late February, but solid support at its $1 level has kept the healthcare concern from falling back to its pre-bull gap lows. 

Struggling CTST Stock Finds Brief Reprieve 

Canada-based pot stock CTST has been in hot water for some time now, moving in a downward trajectory since early July thanks to mounting regulatory issues regarding its grow operations. Today, despite news that Stenocare terminated its license agreement with CannTrust after the Alberta Gaming, Liquor and Cannabis Commission (AGLC) gave notice that it would return $1.3 million in CTST products to the company, the stock is up 11% to trade at $1.41 -- just one day after bottoming out at a record low of $1.13. 

Today's pop could be due to the fact that CTST fell into "oversold" territory yesterday, after plummeting 21% through the first three days of this week. The security's Relative Strength Index (RSI) fell to 28.5 Wednesday, often an indicator that a short-term bounce is in the cards. That said, the intraday rally in CTST today peaked at $1.53, shy of recent resistance at the stock's 20-day moving average at $1.65.


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