Bitcoin Buying Panic Leaves A Dangerously Overextended Market

What’s interesting about the nature of markets is just when one side of the battle between buyers and sellers thinks they have it completely won, they are at their most vulnerable.  Bitcoin has gained over 100% since the start of October on top of an over 900% gain for the year 2017.  Since Bitcoin broke out into a Stage 2 advance in 2015 around $250 it is up over 40x.  Intoxicating gains that everyone is captivated by currently and wishes they could go back in time and capture.

The reality though is the best time to buy Bitcoin was back in 2015 and 2016 when few were talking about it and it was emerging out of a Stage 1 base.  Now everyone is talking about it and greed has taken over and the Stage 2 uptrend has gone into a breathtaking parabola.  Earlier today Bitcoin was more than 130% above it’s 30 week MA which is the most overbought it has been since this uptrend began in 2015.  Amazingly this is the third time in the last 6 months the price has stretched more than 100% above the MA, that is exceedingly rare for something with a market cap of over $150 billion.


For comparison purposes when Cisco Systems made its final parabolic move into the first quarter of 2001 during the Internet bubble it had a market cap of around $500 billion and only made it to 50% above its 30-week MA.

QUALCOMM reached a market cap of $100 billion during the same time period which is more similar to Bitcoin but was only able to get 150% above its 30-week MA, which is close to where Bitcoin is currently.

It’s impossible to tell where Bitcoin will top, or even if it does move lower from here, whether this area will be “the top”.  But it’s easy to say Bitcoin is the most overextended since this uptrend began because it is.  And Bitcoin has no price support in the chart  all the way back down to the $3000-$4000 area which is more than a 50% loss from here.

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The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Uranium Stocks Reawaken After Cameco Cuts Production

At the end of 2016 and the start of 2017 we saw an explosive breakout in the uranium miners, but that rally flamed out and the uranium market went back into a Stage 1 base.  After that failure from about May of this year until the last couple weeks the uranium miners drifted sideways and volume dried up, signalling disinterest in the sector but a general balance between buyers and sellers.  Recent news out of Cameco cutting 10% of world production in uranium caused a flurry of activity in the uranium miners and the price of uranium.

One of the most bullish aspects of the uranium miners that I haven’t seen discussed anywhere else is the positive divergence between the miners and the price of uranium that continues to this day.  Take a look at the charts of U.TO and URA below and notice how the uranium miners (URA) have put in 3 minor but important higher highs (denoted by the circles on the chart) at the same time the price of uranium (U.TO) was making lower lows.  Often this type of action is seen in market bottoms where further declines in the commodity fail to produce lower lows in the commodity producer.  This means the shares of the commodity producer have shifted into stronger hands, they are no longer willing to sell even if the underlying commodity continues to decline in price.  This is what leads to explosive Stage 2 breakouts because once demand comes back in there is literally no one left to sell, and the stocks start ripping higher.


U.TO took fairly good volume last week doing 3x average weekly volume.  The volume in URA was also over 2x average volume on the previous week.  The bigger the volume on a Stage 2 breakout the better, and if we continue to see increased volume in these over the next few weeks that’s a good sign.

I took initial positions in UEC, URG, and UUUU to play this potential new Stage 2 breakout in the uranium miners.  I’ll be watching the price action as always and using the 30-week moving average as my risk management line and indicator of whether to stay in the trade.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

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The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Buying Stocks In A Strong Sector That Haven’t Broken Out Yet: Cannabis Edition

Cannabis stocks are on fire after TWMJF led off as the first stock to break out.  A hot sector can provide a lot of trading opportunities.  Instead of chasing the leaders in a sector you can often buy laggard stocks that will get pulled higher by the large amount of money pouring into the sector.  This works especially well with commodity sectors where all companies in a sector essentially produce the same product.

OGRMF and SPRWF are two good examples of this as I fired off a tweet about these stocks earlier today.  I bought them both in anticipation they would follow the leaders in the sector higher.

With both stocks you can see clear resistance and support levels just like the leading cannabis stocks, but they hadn’t broken above resistance yet.  Both stocks had great volume today and OGRMF had a nice consolidation at the high end of the range leading into today’s breakout.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Cannabis Stocks Break Out Of A Year Long Consolidation

The three main cannabis stocks that I follow exploded higher on massive volume increases over the past couple of weeks.  Not only that but their recent moves busted them out of a year long consolidation in a very bullish manner.  All three of these stocks were 5 to 6 baggers in 2016, and spent about a year consolidating those massive gains.

Canopy Growth shown below broke out above 10 and has done over 4x average weekly volume the past two weeks.

Aphria is breaking out of the former highs in the 6 to 7 area on over 2.5x average weekly volume the past two weeks.

Aurora Cannabis has had a volume explosion over the past week doing over 5x average volume and breaking out above 2.5.

It’s important to note these stocks are all major Canadian cannabis producers with over a billion dollar market cap.  There are many more speculative cannabis related stocks that are nothing more than management teams with plans and dreams that may or may not turn into anything.

I’m long APHQF and ACBFF as of this writing.  I plan on doing follow up posts on this sector as this appears to be a major breakout that could last a while.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Introducing The Real Trading Report – 9/24/2017

Most of the people who write about trading on the Internet do one or more or all of the following 4 things:

  1. Never talk about losing trades.
  2. Don’t have a real system for trading the markets.
  3. Believe that they are smart enough to predict the future.
  4. Are biased to their favorite asset class.

I define a real system as a system that clearly defines entry and exit criteria for winning and losing trades.  Something that you can write down and explain to someone else.  The system makes no attempts to predict the future.  The rules of the system have to be followed.  Many smart traders are aware of different systems and may say that they use them, but when push comes to shove they are NOT really following the rules.

Bias to their favorite asset class means they constantly look for bullish theories for assets they are bullish on, and vice versa for assets they are bearish on.  Whether they are willing to admit it or not, they start with their bullish or bearish outlook first and then try to build a theory behind that outlook to justify their opinion.

I’ve been guilty of all 4 of these things earlier in my trading career.  Until I adopted Stage Analysis I had no real system, but even after I studied Stage Analysis initially I still wasn’t following the rules.  Mostly because I had some inherent biases to different asset classes, notably commodity related assets.  And a lot of those biases came from listening to people who just predict the future and are guilty of the other 3 things above.

In this new series of content on my site at www.nextbigtrade.com I’m going to do the opposite of the 4 things above since I believe that is the real way to trade the markets:  1) talk about winning AND losing trades 2) use a REAL system to trade the markets and follow the rules 3) no predictions and 4) no biases.

For the first report I’m going to take a look at the semiconductors sector and 2 semiconductor stocks that I have positions in.  I like the semiconductors sector because it is clearly in a Stage 2 advance and a number of stocks in that sector are at or near all time highs.  Looking at the chart of SMH below over the last 6 weeks it has started to breakout to the upside after consolidating for a few months over the summer.  SMH has been outperforming the S&P 500 since it broke out in mid-2016 and hasn’t gotten overextended from the 30-week moving average yet (as shown by looking at the PPO below).  According to Stage Analysis when the market is bullish, you want to be in sectors that are outperforming the overall market and in the best stocks in those sectors.

I’ve been tweeting about semiconductor stocks for the last few weeks since I’ve been observing the price action in many names starting to act well.

I made my first entry in NVMI in mid-August and have added some more shares since.  I use the 30-week moving average as a line to measure risk against.  The further I buy above this moving average the more risk I’m taking since the stop loss is right below this line, so this impacts my position sizing.  The closer I buy to the moving average the bigger the position size I can take.  The ideal time to buy is either the breakout above the moving average or a pullback to it during a consolidation.

DAIO looks like a lot of other semiconductor related stocks.  Broke out of a base on explosive volume in mid-2016 then followed it up with another explosive breakout in May of this year.  Consolidated for the rest of the summer but recently has been acting well and might be ready to breakout soon.

My goal is to continue this series with real trading results and be a different format than the majority of what is out there on the Internet.  I will follow up with what happens with these 2 trades and have future trades to discuss as the series progresses.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.