Silver Blinked First… Did You Notice?

 

Wow, what a big down day for gold and silver and what a beautiful relative weakness setup to get positioned ahead of it. Trades like this are exactly why I pay so much attention to intermarket relationships. This one really checked every box, so let’s walk through it step by step.

Just a few days ago, I started talking about the possibility of a near-term top forming in the metals, and the reason was simple: silver was lagging. I’ve said it many times when the leader is no longer leading, that’s worth paying attention to. Silver typically leads gold during strong upside moves, so when that relationship starts to fray, it’s often an early warning sign.

To be clear, I also laid out my line in the sand. I said that if silver broke to new highs, I would hold off on shorting. And technically, silver did break higher. But instead of invalidating the setup, that breakout actually created new relative weakness divergences, which made the trade even more compelling.

On the chart above, I’m looking at a 2-hour chart of silver futures, with gold futures below it, and a ratio line of silver versus gold in the bottom pane. Start with gold. At point B, gold is trading meaningfully higher than it was at point A, a strong, aggressive push higher. Now look at silver. Even though silver also made a higher high at point B, it was only marginally above point A. You could visually see that silver just wasn’t keeping pace.

If that wasn’t obvious enough, the ratio chart made it crystal clear. At point B, the silver to gold ratio made a lower high compared to point A. That told me the move higher in silver was weak relative to gold. In other words, the breakout lacked real leadership.

Once minor support levels began to break, the outcome was decisive. Both gold and silver sold off hard, but silver led the way down exactly what you’d expect when relative weakness is present. The falling ratio line confirmed that silver was underperforming during the decline as well.

This was a textbook example of how using relative strength or in this case, relative weakness can help you catch tops that are otherwise very difficult to time. Trades like this don’t come around every day, but when they do, you want to be ready to recognize them.

If you want to see how this setup started to form, check out my original post from a few days ago, “When the Leader Stops Leading: A Key Level I’m Watching in Silver.”  

PLTR Slips Below 200-Day… Did You Catch That Signal?

 

Above is a 60-minute chart of PLTR, with the SPY shown in the lower pane for comparison. I like using this timeframe because it does a good job of highlighting developing relative strength or weakness without getting lost in the noise of very short-term charts. In this case, the message has been pretty clear.

At point B, the SPY pushed to a new high. PLTR didn’t follow. Instead, it put in a lower high, which immediately caught my attention. That’s a classic sign of relative weakness. When a stock can’t keep pace with the broader market during a rally, it’s often a warning that sellers are quietly gaining control. Sure enough, once minor support was broken, PLTR rolled over and sold off, confirming what the relative action was already suggesting.

Switching over to the daily chart on the right, the bigger picture looks even more concerning. PLTR is now clearly trading below its 200-day moving average, a level that a lot of longer-term participants pay close attention to. When price loses that moving average after an extended run, it often marks a shift in character from bullish to neutral at best, or outright bearish at worst.

This move didn’t come out of nowhere. I’ve been warning about potential weakness in PLTR since December 29th. I’ve marked a grey circle on the chart where I alerted my readers that PLTR had turned bearish. At that time, we saw a failed swing high against the SPX along with a break of the uptrend line. Those are not things I ignore, especially when they happen together. Since that alert, PLTR has put in a pretty clean move to the downside.

Just to be clear, when I say I alerted my readers, there’s no paywall or subscription involved. My blog is completely free. I post these observations in real time, not in hindsight. If you want more detail on the initial breakdown, you can check out the post titled “PLTR Turning Bearish: Failed Swing High vs. SPX and Uptrend Line Broken.”

For now, the burden of proof is on PLTR. Until it can reclaim key levels and start showing relative strength again, I’m treating rallies as suspect and respecting the weakness the charts are clearly showing.

MSOS Déjà Vu… Until It Wasn’t

 Well, it’s like déjà vu all over again. MSOS opened and sold off immediately, just like yesterday and the day before. Above is a 2-minute chart of MSOS with the SPY in the lower pane for comparison. I’m using a 2-minute chart here because I want to show more detail, but honestly you’d see the same thing on a 5- or even a 10-minute chart, the message doesn’t change.

At the open, both MSOS and the SPY sold off into point A. Nothing surprising there. Then the SPY managed a small bounce before rolling over again and making new lows at point B. That’s where things got interesting. Instead of following the market lower, MSOS held up. Not only did it refuse to make a new low, it actually put in a higher low and began curling higher, threatening to take out minor resistance.

That’s relative strength, folks (on a small scale) and it’s something we simply haven’t seen out of MSOS over the past week. That divergence was enough to get me long for a day trade. I wasn’t expecting fireworks, and I didn’t get them. MSOS only rallied about a dime from my entry, so nothing great, but I’ll take it. In a tape like this, even small signs of strength are worth paying attention to.

Zooming out to the daily chart on the right, the bigger picture if getting a bit oversold. This marks the fourth consecutive lower high, so the intermediate trend is clearly still down. That said, today’s candle left a noticeable bottoming tail after flushing below the $4 level and then reclaiming it.  We also came very close to filling the downside gap, which often matters when you’re looking for at least a short-term bounce.

I’m not about to declare this the bottom, more like a bottom. If we can take out today’s high around 4.24, I’ll look to get long for a tradable bounce. My core position remains intact; this would simply be a separate short-term trade.

For now, I’m watching and letting the market show its hand. Let’s see how things unfold.

For more analysis and market insights, visit my homepage 

TLRY… are you kidding me?

 

This felt like a straight up replay of yesterday, only worse. Above is a 5-minute chart of TLRY, with MSOS in the lower pane for comparison, and from the opening bell the tone was already familiar. At point A, TLRY opens and immediately sells off hard. No hesitation, no attempt to find its footing, just straight down, almost identical to what we saw yesterday. Right away I’m on alert, because when a stock can’t even hold the open in a supposedly bullish environment, that’s information.

Then around noon ET the headline hits. The news sends MSOS ripping higher, pushing to a new intraday high at point B. This is where I’m watching very closely. If TLRY is healthy, if it’s truly participating, this is the moment it should respond. Did it make a new high? No. Instead, it stalled and rolled over, printing a lower high. Instantly my focus shifts from optimism to defense. Relative weakness. In my head I’m hearing, “Danger Will Robinson.”

About an hour later, MSOS does it again. Another push to a fresh high, another opportunity for TLRY to confirm. And once again, TLRY fails. Another lower high. At that point there’s no ambiguity. I’ve seen this movie too many times before, and I know exactly how it ends if support gives way. When the ETF is making higher highs and the individual stock can’t keep up, sellers are in control whether I like it or not.

Here’s the part that stings. I’m long TLRY. I’ve been holding shares since last summer, and emotionally that matters more than it should. But being long doesn’t give me a free pass to ignore what’s right in front of me. So I do what I know I’m supposed to do. I place a sell stop on one-third of my position, right below support. This isn’t me flipping bearish on the whole thesis, it’s me respecting risk.

Not long after, TLRY breaks the low, triggers my sell stop, and from there both TLRY and MSOS sink into the close, finishing basically at their lows. Confirmation, unfortunately, came fast.

What frustrates me the most is that about 90% of my trading is based on pure technical signals. I live in volume. I rely heavily on relative strength, cycles, and clean support and resistance levels. Fundamentals are great to have as a backdrop, but technical analysis is what actually drives my decision making. And yet here I am, getting emotionally tangled up in the rescheduling narrative and letting that override signals that have been flashing sell for days.

The result is that I’ve given back a significant chunk of the profits I built up after buying these stocks last summer. Even though I’m still slightly positive overall, it feels like I’ve lost a ton of money. That’s the psychological trap, giving back gains hurts just as much, sometimes more, than taking an outright loss.

The chart didn’t lie. I just didn’t want to listen.

For more analysis and market insights, visit my homepage 

The Gap Is Filled, but the Frustration Remains

 

Well, we finally got it over with, TLRY filled its gap at 8.43. Being long this stock, that’s obviously not something I was hoping to see, but at the same time I’m glad the market dealt with it now instead of dragging it out. Open gaps have a way of acting like magnets, and once they’re filled, at least that question mark is removed.

On the left above is a 5-minute chart of TLRY. The stock opened flat and then quickly sold off, tagging the gap fill around 8.40. After that initial move lower, TLRY pretty much went nowhere for the rest of the session. We saw a lot of sideways action, very little momentum, and the stock ultimately closed right near its low. That kind of price action tells me there’s still no real urgency on the buy side, at least in the short term.

If you shift over to the daily chart on the right, you can clearly see the gap that was filled today. From a pure technical standpoint, this is actually an area where you could see a bounce or even the start of a rally. Gap fills often mark logical inflection points. The problem, as usual with this sector, is the lack of a catalyst. Right now, no news is bearish news, and that’s exactly why we continue to see the entire cannabis sector drifting lower in what feels like a slow, painful bleed.

We’re down to just three more trading days left in the month of January, and it would be great to finally hear something concrete regarding the finalization of rescheduling. That’s the overhang everyone is waiting on, and until we get clarity, it’s hard to see aggressive buying step in.

That said, I want to be clear about my mindset. I’m in this trade for a longer-term move. I still believe the fundamentals favor a bull market in the cannabis sector, and I’m willing to sit through short-term noise to be positioned for that. In the near term, though, I’ll be the first to admit this has been extremely frustrating.

For now, all we can do is stay patient, manage risk, and see what tomorrow brings.

For more analysis and market insights, visit my homepage