B2Gold (BTG) is Signaling Both Unusual Options Activity and the J-Hook

Although the market appears to have dodged disaster with a seeming deal on the table to avoid a government shutdown, investors can’t quite relax just yet. With President Donald Trump launching a trade war, traders have little choice but to be extra vigilant. However, the precious metals mining complex could represent a rare bright spot, with B2Gold (BTG) looking especially compelling.

Since the beginning of the year, BTG stock gained over 21%, a terrific way to get things rolling. Even better, BTG is outperforming the underlying asset. Per Google Finance, gold’s continuous contract price at the Comex is up 13.35% year-to-date. Most conspicuously, the benchmark S&P 500 is down more than 4%, demonstrating the paradigm shift that has occurred.

Indeed, few sectors exist that are as hot as the yellow metal. As an AP report stated, the price of bullion has skyrocketed to unparalleled heights due to widespread economic turmoil.

“Interest in buying gold can rise sharply in times of uncertainty, as anxious investors seek safe havens for their money. Gold prices are spiking higher now as U.S. President Donald Trump's tariff policies have kicked off an international trade war that has roiled financial markets and threatened to reignite inflation for families and businesses alike,” the news agency wrote.

Of course, there are no guarantees, especially with a volatile market like gold. However, if economic uncertainty continues to be the dominant theme, analysts believe that the yellow metal’s ascent may march northward still. And if that’s the case, the underlying tailwinds could lift BTG stock.

True, miners have lagged gold — historical price charts don’t lie. Still, the cost overruns and labor shortages that have crimped profitability could eventually give way. It really comes down to the math. If gold continues to rise, the bottom line for several mining enterprises may eventually go into the black.

BTG Stock Pings Unusual Options Activity and the J-Hook

Whenever a security makes the ranks of Barchart’s unusual stock options volume indicator, it’s a powerful sign. It doesn’t guarantee a directional move. However, it demonstrates that professional traders are engaging the opportunity. Since such folks tend to be more influential than the average market participant, their activities could potentially provide useful intelligence.

Another enticing indication that something special is cooking is when a security is featured in Barchart Screeners — especially when you’re talking about a focused screener like the J-Pattern. Colloquially known as the J-Hook, this technical formation materializes when the target security breaks out of a negatively tilted consolidation phase following an initial rally.

In many ways, the J-Hook is similar to the more common bullish pennant or flag. All these pattern feature an initial rally, which then temporarily succumbs to a consolidation phase. It’s just that in the J-Hook, the consolidation can entirely reverse the gains of the initial rally rather than merely move sideways.

Still, it’s the outcome — the much-hoped for bullish breakaway — that makes these technical patterns so compelling.

On Friday, Barchart members were alerted to BTG stock flashing both signals. First, after Friday’s closing bell rang out, total options volume reached 5,907 contracts against an open interest reading of 239,406 contracts. Volume on the day stood at 49.05% above the trailing one-month average metric. Further, the put/call ratio sat at 0.33.

Options flow data — which focuses on big block transactions likely placed by institutional investors — showed net trade sentiment on Friday as $33,700, favoring the bulls. Therefore, the sub-1 put/call ratio could be read intuitively: smart money traders appear to be optimistic about BTG stock.

Second, BTG stock represented one of the few winners of last week, gaining just under 10%. Against Wednesday’s close, the last two sessions of the week resulted in a return of 8.42%. That move helped seal the pinging of the J-Hook.

Statistical Trends Could Favor B2Gold

Finally, one nuance to consider is the statistical backdrop. Using data over the past six years, a long position held for any given eight-week period has only a 48.42% chance of being profitable. Thus, BTG stock suffers from a negative bias.

Further, weekly momentum under the double-digit-percentage threshold does nothing to change the probabilities, at least for the better. When BTG gains less than 10% over a five-session period, a subsequent eight-week long position only has a 35.56% chance of success.

That said, when BTG stock gains between 10% and 20% in a one-week period, a four-week long position has a 62.5% chance of rising. Keep in mind that BTG gained 9.83% last week — awfully close to the double-digit threshold. Combined with the J-Hook signal, B2Gold is worth consideration for risk-tolerant speculators.