2 Stocks Joining Weed Sector Rally

An earnings beat from Aphria is helping the marijuana sector buck the broad market selloff

While stocks are sinking today on trade fears, the weed sector is bucking broad market trends. This sector surge includes Cronos (CRON), up on its buyout of Redwood. Two other names making headlines today are Aphria Inc (NYSE:APHA) and Aurora Cannabis Inc (NYSE:ACB). Below we'll take a look at what's driving ACB and APHA.

Aphria Stock Bounces Back After Earnings Surprise

APHA is soaring today, up 36.5% at $7.10 after reporting fiscal fourth-quarter earnings that were better than expected. This had CIBC lifting its target price to $5.30 from $4.92. The analyst said the company's fiscal 2020 guidance is very reliant on the second half of this year. The stock is now eyeing its highest close in over a month, just after bottoming out at a six-month low. Plus, it is now trading atop its 80-day moving average -- a trendline APHA has been looking up at since its mid-April bear gap.

Naturally, options traders are swarming the stock. So far, 50,000 calls and 7,808 puts have exchanged hands -- 13 times the intraday norm . The majority of this activity is surrounding the weekly 9/6 6.5-strike call, with contracts being bought to open here. Following this is the weekly 8/2 7-strike call, where a number of traders are selling to open, with the expectation that APHA will fall back below the $7 region by the time the contract expires later today.

Aurora Cannabis Gets Halo Lift

ACB is riding the coattails of its sector peers today, up 6.7% at $6.23 at last check. Like Aphria, Aurora bottomed out yesterday, falling to $5.85 by the close -- its lowest in seven months. Now, the stock is back atop recent support at its $6 region.

A short-term bounce could be on the docket for ACB, too. Currently the security's 14-day Relative Strength Index (RSI) of 25 sits firmly in "oversold" territory. That being said, a rebound could have short sellers hitting the exits, leading to a potential short squeeze situation. Currently, the 87.2 million shares sold short represent a healthy 8.9% of the stock's available float. Plus, at ACB's average pace of trading, it would take roughly seven days to cover all these pessimistic positions.