Friday January 12th – Sell That News?

SO MUCH TO SAY, FOR A FRI-DAY!

1. We have Data that could Matter…on Friday

2. Bitcoin ETF approvals caused….A LARGE  sell off in Crypto related stocks (Buy the rumor, Sell that news wins again?)  Well, likely just in the short term. Buy the dip later.

3. Was that a possible topping spike in Bitcoin? We’ll have to wait and see.

4. Silver failed, and we know that the other Precious Metals will soon follow

5. We are heading into another 3 day weekend in the U.S.? What?? Yes we are, so position accordingly.

 

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The General Markets dropped on the inflation data (inflation unexpectedly moved slightly higher this time), but there is strength following a dcl, so the markets fought back into the close. After dropping and bouncing off of the 20 sma, it almost went green. This is a dcl and should be able to buy and hold, with a stop under the dcl.

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WTIC – Oil remains —- Choppy! But you knew that. Day 19 is roughly 1/2 way through this first daily cycle, so it can still push higher, but for now it is just a frustrating choppy daily cycle.

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The USD could be flagging at resistance, and of it is, it would resolve by breaking higher. If it weakens and drops lower, Gold could push higher.

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GRAVESTONE DOJIs are often reversals after a sell off. The day after a gravestone doji CAN undercut it and then reverse higher, or price can also just move higher the next day.  Gold has a gravestone doji.

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GOLD is on day 19 and it put in a small reversal candle (gravestone doji) right at the 50sma. Can Gold move higher with that USD holding up? It honestly should be too early for a dcl, but they have been coming in earlier than usual lately too. That said, let’s see if Gold can push higher on day 20.

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When I look at SILVER, I see that it did break below the last dcl and that is a sign of weakness. Also, Silver is quite L.T., so Silvers weakness is evident, but it can just continue to chop around, it just is not likely to run up and break out until after the next CIL.

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Along with Golds Gravestone Doji, The GDX ETF also put in a reversal hammer at the 50sma. Anything can happen, but the charts are currently indicating that buyers stepped in and it wants to bounce off of support.

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Being invested in the General Markets should be fine over the 3 day weekend, but because today is Friday, the last day before a 3 day weekend in the U.S., that always makes trades around the Crypto Sector tricky, since Bitcoin trades 24/7. Gold also opens on Sunday at 6 p.m. Eastern, so it’ll be trading without the U.S. Markets from Sunday night into Tuesday morning, so plan accordingly. With the Bitcoin ETF Approval, things got interesting yesterday, so I will discuss Bitcoin below. Enjoy your Friday trading!

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~ALEX

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BITCOIN rallied about $3,000-$4,000 on Thursday after the approval, but then it sold off quickly. This is a reversal candle, so this MIGHT be topping and ready to drop into that day 60+ dcl. We’ll see. So far though, this was a $4,000 rally and reversal with the approval.

BITCOIN When I look at Bitcoin, it still looks like a bullish cup or pan and handle and it doesn’t have to top here, especially if we had that stealth DCL in place, so now with the added noise of an ETF approval, we see several indecision candles forming and the immediate path for this 3 day weekend becomes unknown.

One thing for sure though, is that Crypto Stocks were BUY THAT RUMOR of an approval all through November and December, and sellers certainly showed up with that approval  (Sell the News). Let’s take a look at MARA, and they pretty much all acted this way…

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MARA rallied at the open and started to drop, and I had called out that many Gaps in Crypto do fill.  If you look at a chart of MARA, RIOT, HUT, etc- rarely do you see a gap and go. Occasionally we do, but most gaps fill on these stocks.

So I was watching for the GAP FILL and posted this chart, looking to buy a reversal higher, maybe at the red 20 ema.

MARA – I looked at the volume 1 hr into trading and didn’t like what I saw. I saw Heavy Heavy selling , no reversal yet, and now it was possible that a ‘sell that news’ drop might break down into an A-B-C Down.  I had mentioned this idea in past reports, so I wanted to post this as a cautionary note.

MARA did not reverse higher, it just sold off constantly so far, and for anyone that jumped in on the gap open? They saw a drop from $29 to $20!  WOW!

 

No one can really say for a certainty how this will play out, but at this point it was ‘Buy the rumor, Sell the news.“

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This is really a good Lesson for future events, and I’ll explain why…

 In December I actually got 3 emails from well-intentioned readers (when I mentioned in December that we could see a sell off after the ETF). These traders read everything on Twitter & other websites about the approval and upside price targets of $200,000. They were humbly writing to me to share that info, and I do appreciate that. Again, these were well-intentioned traders that were 100% sure that what they were hearing was that with the approval, there could be no selling.  The theory was that all of these new ETFs would need to be buyers.  They would instantly have to ‘Load up” on Bitcoin itself and rocket price to a spike ‘new high’.  They wanted to tell me to get my readers all in, and we’d all be strongly rewarded.  I simply replied with my reasons to need to be cautious with such a volatile sector, but I was extremely bullish long term too.  It is a good lesson for all of us: Anything can happen and usually the majority are wrong.  With that, the markets are NOT rational, so I use charts & cycles more than I use fundamentals and all of the reasons why.  Could it have happened that way?  Yes, we’ve had a good run and that could have caused a blow off top rally into March, and then a bit of a crash.  I thought that as 1 possibility, we could see that, but I do not like that everyone and their grandmother was ready for Crypto to go to the moon, and that it HAD to happen that way. I skimmed through Twitter ( excuse me, “X”) a few times, and too many were really giddy, and ready to instantly become millionaires within a month.   I was thinking that the SEC & ‘powers that be’ probably laid out some regulations and found a way to tame it.

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   That said: I absolutely DO believe that this approval is very Bullish for Crypto. I absolutely do believe that higher targets are in store. I have been saying that too. I absolutely DO feel that Crypto stocks will double and triple and more over time, but I have very often seen this ‘buy the rumor, sell the news play out in the past’, so you have to be reasonable.  I remember well that it happened with GLD, SLV, GDX, GDXJ ETFs too.  I used to trade HUI & XAU & miners in the 2000- 2012’s, and when GLD, SLV, GDX and GDXJ came out, it was often claimed that their forced buying would push Gold & The miners to the moon then too. The supply was limited, so the price would explode with ETFs buying.  Well guess what?  They sell on the way down too!

 This time around I was told that it was impossible for Bitcoin not to immediately rally day after day, because all of these ETFs would have to load up and buy. One reader had a formula showing that the inflow or surge of buyers would probably cause an immediate spike rally to $100,000.   I will say that it does sound possible. It seemed possible for a massive multi week rally to shoot price up into a frenzy, and on the weekly charts I am still seeing a possible run to $60,000 area as valid, but often when everyone expects something and feel that it is impossible for it not to happen, I get very very cautious. The markets are not rational, and it is still hard to know how these approvals came to be ( what rules and restrictions applied?). I am still wondering whether or not we got a stealth dcl in the consolidation(?), or will we get that drop into the 60+ day area?

From here, I’ll keep watching the charts, cycles, and technical analysis- and see what any new inflows does for the sector. I am longer term VERY BULLISH On this sector, but I can guarantee you that the volatility of the past may only be multiplied at times going forward.  It’s a tough sector and not for everyone unless you can just buy one of the ETFS or stocks and allow it to do what it will do, and see where it is 1 yr from now.

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*** Most importantly, let me add one more thing:  We have VERY SMART CRYPTO INVESTORS HERE. Many are Very well informed, and it is very helpful. I appreciate you all, and please DO NOT hold back from adding thoughts to the commenting area.  Ideas on Bitcoin or Alt coins, etc is well received by myself and many other readers. Also, those emails made me do more research on the side, so we did all benefit from that- so I appreciate those emails too.    I will discuss more in the future and the weekend report.