Various financial markets have several key questions that they will answer to us this week. Some are serious, and some are not so serious, and one is bullish. First we’ll start with the critical one and that is Bitcoin. Last week Bitcoin fell below the key $50,000 psychological price point on Friday. It clawed its way back above that level Sunday night as the Nasdaq rallied on Friday, but it is still in big danger of going down again. If it does the selling could easily pick up on it. Everyone is watching the $50,000 Bitcoin level.
Frankly, the crypto market has the earmarks of a vicious manipulation surrounding it. There is one big warning sign on the Bitcoin chart and that is the fact that while it has been above $50,000 the down days for Bitcoin has seen much bigger trading volume on the down days than on the up days. Check out the on balance volume indicator on the bottom of this chart, which makes this clear.
Once Bitcoin went above $45,000 in February the on balance volume indicator went sideways even though the price went up to $65,000. This is a sign of distribution and you rarely see such a big divergence between this indicator and any ETF or stock when it goes up as strong as Bitcoin did. It is likely some form of vicious price manipulation, which there are things that can be done in Bitcoin that are illegal in anything else as cryptos have little regulation to them at all.
Before the SEC was founded stock manipulation was actually legal and there existed what were called “stock pools” that engaged in vicious manipulation.
People such as Jesse Livermore and Joseph Kennedy were involved in such pools, but so were many others whose names are forgotten today.
One of the biggest investing publications of the 1920’s and 1930’s was a journal called The Magazine of Wall Street edited by Richard Wyckoff.
I got a hold of a couple of old issues a few years ago and this one from 1925 details right out in the open how stock pools operated. There is a lot to learn from old classic trading books and publications.
f you read this issue you’ll find out exactly how manipulation happens.
To read this key article from this issue click here.
I’ll give you the short version – manipulations don’t happen with people shorting stocks and making crashes, but by people marking stocks up and then putting out rumors that big news is going to happen so they can dump.
A stock pool operated when a small block of insiders owned a large amount of shares and then took a small number of shares and sold them back and forth to each other at successively higher prices to “walk the stock up” or “mark it up.”
Such a thing is totally illegal to do today and with the data the exchanges have on trades anyone trying to do such a thing can easily come under SEC examination.
But there is no such regulation for Bitcoin.
This is probably why the on balance volume indicator on Bitcoin is going down even when it went up. Beware of crypto coins. They may rally for a few days, but if Bitcoin goes through $50,000 it will be a disaster for crypto players.
So, that said, the second market with a question market on it this week is the Nasdaq.
The Nasdaq now has support at $13750. If it closes this Friday below that level, such a weekly move would suggest that a correction is starting. If it closes Friday above $14050, though, it would mean another rally is set. Even if there is a correction in May I don’t think it would be a crash, but more like a ten percent type of dip like we saw in February. I really have no opinion on it one way or the other. Notice that the on balance volume indicator on this chart does not look like the Bitcoin one does. This is a more normal reading for a market that has been rallying, but has not made a new high in over two months.
Hopefully it all goes up, but the Nasdaq is lagging the DOW and S&P 500 and the fad tech stocks and funds like ARKK are lagging substantially as leadership has shifted into other sectors and even asset classes.
And that takes me to me third question and that is whether or not copper will make a new high this week again. We saw corn explode last Thursday and go limit up again. Silver is in a good position, but copper has been rallying even harder than silver in the past six months.
If you own or just have been watching my top stock pick for this month Pacific Ridge Exploration (PEXZF) then you know it has been going up strong all month. One reason why is that it is focused on both gold and copper. The double bottom in gold in March has helped to start to bring money into gold stocks again and copper’s rise brought attention to properties like the ones that Pacific Ridge Exploration is involved with. You can see it in the chart.
Notice how the on balance volume indicator for Pacific Ridge Exploration has gone straight up in the past six weeks to show us that there has been very little selling volume on the down days in it at all. This is bullish. For more on this stock check out my first full profile on it here.
-Mike
Disclosure: Mike Swanson owns shares of Rio Tino and Pacific Ridge Exploration. Because Pacific Ridge Exploration is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this post (04/04/2021). Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to conduct an investor awareness advertising and marketing campaign for Sonoro Gold Corp. This third party paid Timingwallstreet Inc., $16,000 to produce and disseminate this and other similar articles and send traffic to them through paid advertising campaigns for 30-days from the date of this post (4/04/2021). This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.
