Sliver… A Parabolic Top In The Making?
The S&P closed the shortened holiday week up 0.94% at a brand new record high and supporting evidence unchanged from the week prior.
* January 01 – New Years Day – Markets Closed Full Day
There isn’t much going on with the fundamental narrative as the holidays are in full effect.
This week will be, yet again, a week to maintain discipline and not blow anything up in a thin tape headed into the new year. This is especially true if trading options or leveraged ETF versions of Mag 7 companies.
Let’s quickly talk about the elephant in the room…
Silver Steals The Show
Into the end of last week, silver kicked off a nearly parabolic blow off top up over 45% since the breakout.
Price closed over the upper Bollinger band as well as printed volume over 320% higher than the average of the last 30 bars on Friday.
Studying the prior cases where similar volume printed would indicate that this is not a great place to be buying silver, but rather a great place to be selling silver.
The narrative of what’s happening here is a combination of expanding demand when it comes to solar (photovoltaics) up 289% from 2015 paired with more recently China initiating silver export restrictions starting January 01, 2025.
Narrative aside, this isn’t a direct call to short silver.
Shorting parabolic tops is a blend of art and science that often times requires more than one stab at an entry. For most, its best to just avoid standing in front of the moving freight train, and if you’re not already long, just avoid the shiny object… literally.
If you’ve got the nerve to give it a go on the short side, size it right, and respect the stop. To get involved I would at least want to see a failed gap up with price accepting inside prior bar range, price living below the VWAP intraday, price taking out a prior daily low.
It doesn’t have top happen on Monday, but its a general theme to be watching for. Remember, the more stretched the rubber band gets, the harsher the snap back.
Trade Brigade Live Squawk
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Broad Market Analysis
SPY – Weekly
Looks like the start of a weekly breakout over the multi month consolidation. A measured move of the range is roughly 721. If this fails, I would still be in search of a weekly higher low over the 20 SMA.
SPY – Daily
Continuation or daily higher low over the gap fill from Monday of last week seems like highest odds for the development of this chart. Higher lows don’t have to close the gap, and could be above Monday’s high.
Under the 679.75 level things get more difficult.
SPY – Hourly
Here are the pullback long areas I’m watching. To short the market, would really need a no brainer lower high under 689 to initiate look above and fail.
Any other trade location would be an area I’m more interested in seeing a HL develop, not a new short.
Market Internals – NYSE
Illustration here is that we have a balanced intraday session on Friday with slightly more bearish market internals. Perhaps markets need a pullback through the Tuesday/Wednesday thin structure rally.
Market Profile
Value continues to move in the upward direction. Tough to say sellers have taken a firm stance here. Even if we pullback to test Monday’s high, value will be mostly overlapping with Tuesday.
XLF – Financials Sectors
Sector posture did’t do much thats concerning last week. The S&P seems more resilient primarily due to the clear breakout in financials.
SPXT – Junk Bonds
If you strip out the tech sector from the market, price still made a new all time closing high on the weekly bar even with the pullback on Friday.
If you want the full take, including all of the nuance of breadth, risk appetite and much, much more, check out the weekend episode here:
Economic & Earnings Calendar
This is the calendar through January 09.
Mostly interested in ISM PMIs and Labor upcoming starting with JOLTs on Wednesday January 07 based on our discussion above.
Top watches: NONE!
Swing Stock Scans
CART – Daily
Small ascending triangle with an unfilled earnings gap above to use as a target. Ideally trendline holds to keep this in play.
DHR – Daily
Same as above, ascending triangle after multi month base, now looking to close the old earnings gap above.
ISRG – Daily
Still in play from last week: Weekly consolidation after an earnings gap to recapture the daily 200 SMA. Over 579.65 things get interesting towards 609.3.
RUN – Daily / Weekly
Great cup and handle on the weekly chart with a break of the handle flag trend line last week. Looking for moves over the 20.25 to sustain to the top of the handle at 22.4. If 22.4 can breakout, that would lead me to watch for weekly momentum and a new strong uptrend to emerge out of a stage 1 weekly base. Needs a lot of work, but worth watching this solar sector. Use $TAN as an ETF to track the basket.