A Low Is Due… But I’m Still Not Buying Bitcoin

 

I’ve been bearish on Bitcoin for the past several months, and I think the evidence continues to support that stance. When I look at this market through the lens of relative strength, it’s clear to me that money has been steadily leaving Bitcoin rather than flowing into it. That kind of behavior usually isn’t a recipe for sustained upside. On top of that, my longer-term cycle work still points to lower prices ahead, potentially stretching into the late summer months. From a bigger picture perspective, I remain firmly in the bearish camp.

That said, markets don’t move in straight lines, and the short-term picture is a bit more nuanced. Over the past 15 months, Bitcoin has been respecting a very consistent 2½-month cycle. This cycle has done a remarkably good job of identifying time windows when short-term lows are likely to form. If you look at the daily chart above, you can see how often this rhythm has shown up and how useful it’s been in highlighting potential turning points.

Based on that cycle, another short-term low looks like it could be due sometime this coming week. Now, even though that suggests a bounce may be approaching, it doesn’t change my overall bias. I’m not interested in trying to pick a bottom here. Instead, I’d much rather let Bitcoin bounce and then look for that rally to create another, potentially lower-risk shorting opportunity.

For me, the key question is whether this 2½-month cycle continues to dominate the short-term swings in this market. If it does, we should get a decent tradable bounce soon. Either way, I’ll be watching closely to see how things unfold and whether this familiar rhythm once again shows its hand.

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YCBD Woke Up on Friday

 On Friday there was one cannabis stock that really caught my attention, and that stock was YCBD. It wasn’t just the price action that stood out, but the combination of volume and range that showed up at exactly the right time. Above is a daily chart of YCBD, and the first thing I want to point out is the clear expansion in both range and volume. After contracting for most of the week, the stock finally made its move on Friday, and it did so in a meaningful way.

I always pay close attention to periods of contraction followed by expansion. When a stock tightens up and volatility dries up, it’s often storing energy. In YCBD’s case, that energy was released on Friday. The wide-range candle accompanied by a noticeable increase in volume tells me participation picked up in a big way. That’s not random. That’s buyers stepping in with intent after a week of indecision.

Now shift your focus to the weekly chart on the right, because this is where the bigger picture starts to come together. Notice how the move from point C to point D closely mirrors the move we saw earlier from point A to point B. In both instances, the stock experienced several red candles in a row, pressuring price lower and shaking out weak hands. That was followed by a strong green candle on increased volume at points B and D. Those candles marked the low and signaled the start of the next rally.

Patterns like this don’t guarantee anything, but when I see symmetry like that on a higher timeframe, I take notice. Markets have a way of repeating behaviors, especially in beaten down sectors like cannabis. The fact that YCBD is showing a familiar rhythm on the weekly chart while simultaneously flashing expansion signals on the daily chart makes this setup particularly interesting.

Going forward, there’s one level I’m watching very closely: Friday’s high at 1.32. That level now represents short-term resistance and a potential trigger point. If YCBD can break above 1.32, I think it opens the door for the next leg higher. A breakout through that level would confirm that Friday’s move wasn’t just a one day wonder, but the beginning of a broader rally.

For now, this stock is firmly on my watchlist. I want to see how it behaves around that 1.32 level and whether volume continues to support the move. If it does, YCBD could be setting up for something much bigger.

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The Warning Sign Inside the Gold Rally

 

Yesterday I talked about how silver’s relative weakness could have helped identify the top in gold and silver on Friday, but there was another way to spot the same warning signal if you were watching the gold stocks relative to gold itself. Sometimes the clearest tells don’t come from the headline asset, but from what’s happening just beneath the surface.

Above is a 60-minute chart of GDX, the ETF that tracks gold mining stocks. In the lower pane is a ratio line of GDX versus GLD. Early on, this relationship was about as clean as it gets. As GDX moved higher, the ratio line followed it almost lockstep picture perfect, with no divergences at all. That kind of action confirms a rally. When gold stocks are outperforming or at least keeping pace with gold, it tells me the move is healthy and broad-based.

That all changed at point B. GDX pushed to a new high, but the ratio line did something very different. Instead of confirming the move, it made a much lower high. That’s a classic relative weakness divergence, and it immediately put the rally on notice. The reason for that divergence becomes clear when you look at what gold itself was doing at that moment. GLD was exploding to the upside, yet the gold stocks could only manage a marginally higher high. In other words, the miners were no longer keeping up with the metal.

That disconnect matters. Gold stocks are leveraged plays on gold, so when gold is surging and the miners aren’t responding with equal or greater strength, something is wrong. The ratio line captured that weakness perfectly. You didn’t need to predict anything  you just needed to observe the relationship.

Sure enough, the confirmation came quickly. The first large red candle in GDX was the signal that sellers had taken control. From there, the damage accelerated. GDX sold off sharply, gapped down at the open, and closed near its lows for the day. The divergence didn’t tell you exactly when to exit, but it put you on high alert and kept you from being blindsided.

What’s even more compelling is that this wasn’t isolated to GDX. Other gold stocks like NEM, AU, and AEM showed the same type of relative weakness leading into the selloff. When multiple names flash the same signal, it adds weight to the message.

This is a great example of why I rely so heavily on relative strength and weakness. Price alone can be deceptive. The ratio line helps answer a critical question: is the market truly strong, or is the move starting to crack? In this case, it was clearly the latter.

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Record Volume and Room to Run

 

The month has come to an end, and what a month it has been for RDW. Looking at the monthly chart above, the first thing that jumps out is the record volume we’ve seen. Seriously, just look at that massive spike and what’s even more interesting is that we aren’t even overbought on the monthly chart yet. That tells me this isn’t a climactic top; it feels more like an igniting move that still has room to run. In my opinion, I think we still have a lot more upside ahead, and that makes this setup particularly exciting.

Shifting to the daily chart on the right, I’m looking closely at RDW with its simple moving average of the lows. I can’t tell you how many times this moving average has acted like a roadmap for me, helping me pinpoint some really solid pullbacks. Each time price has approached this average, it has provided consistent support, giving me confidence that it’s a level worth paying attention to. Right now, that moving average sits at about $11, and that’s the level I’m focusing on for potential entries.

I’m not going to just blindly buy at $11, though. I want some kind of confirmation on a lower timeframe before stepping in. I’ll be looking for signals like bottoming tails, engulfing bars, trendline breaks, or relative strength showing up. If any of those signs appear once RDW tests the $11 area, that’s when I’m planning to get involved. This approach gives me both a clear price level to focus on and a structured way to confirm that the pullback is legitimate.

What excites me most about this setup is the combination of huge monthly volume without being overbought and a daily moving average that’s proven itself repeatedly as support. That’s a rare mix, it gives me confidence that we aren’t looking at a short-term spike but a move with more legs. Patience will be key here. I’ll wait for the test of $11 and the confirmation I’m looking for, and when it lines up, I’ll be ready. RDW has been giving signals I can trust recently, and this looks like another opportunity to take advantage of the trend while respecting risk. I’m optimistic heading into the next month and ready to make my move if the setup delivers.

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January Promised Everything… and Delivered Nothing

 

It’s the end of the week and the final trading day of the month, and on both the weekly and monthly timeframes we closed with red candles. That alone tells you a lot about the tone in the cannabis space right now. Above on the left is a weekly chart of MSOS, and you can clearly see that we’ve broken down from a five-week consolidation. That range had been tightening up nicely, but instead of resolving higher, sellers stepped in and pushed price lower. That’s never what you want to see coming off consolidation, especially when expectations were elevated heading into the month.

On the right is the monthly chart of MSOS, and here we’ve put in an inside month. What’s interesting is that many of the individual cannabis stocks are showing the same pattern. Inside months tell me the market is coiling and waiting, but the problem is that this particular inside month closed down. That suggests hesitation and frustration rather than constructive accumulation.

At this point it’s obvious the market is waiting for the next real catalyst. When updates don’t come specifically from Pam Bondi, impatient traders start selling. President Trump had made it clear he wanted rescheduling finalized by the end of January, and as we can all see, that deadline has come and gone. The longer the silence, the more confidence erodes in the short term.

Some people are pointing to broader geopolitical issues, like what’s going on with Venezuela and Minneapolis, as reasons for the delay. The hope is that February becomes the month where rescheduling finally gets pushed across the finish line. Maybe that’s the case, maybe it isn’t we’ll find out soon enough. For now, all we have is price, and price has been disappointing.

I’ll admit it, I came into January with high expectations. Seasonally, January and February tend to be strong months for the cannabis sector, and with all the buildup around policy changes, it felt like the timing finally lined up. Instead, all we could muster was an inside month with a red close. That’s a tough pill to swallow.

That said, I’m not throwing in the towel. I remain cautiously optimistic heading into February, but I’m also realistic. Until MSOS can reclaim the $5 level, a lot of what we’re seeing right now is just noise and frustration driven trading. The bigger move will come when price confirms it. Until then, patience is required. Let’s see what the new month brings.

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