Silver Update

My timing was a bit flawed last night in that I put up the prior post and then realized that the futures had been down before I had posted it. No, I can’t prove that of course but after over three years of holding my own feet to the fire I hope you guys will give me the benefit of the doubt 😉

Anyway, I wanted to follow up on Silver as that big move down changes the situation a little bit on a short term basis:

The perfect entry to go short of course was the inside day on the 29th – that is now ancient history and we now need to look forward. First up what’s interesting on the chart above is where Silver bounced – right on my 25-d MA. For some reason very few folks I know use the 25-d/100-d BB combo and I really wonder why as it continues to be spot on over and over again. So, if you were short on Friday (good job tradingmom!!) then I hope you took profits early this morning when emotions reigned high.

I am now starting a new net-lines buy/sell level chart (á la Chris Carolan) on Silver and the line above is my first mark. As you can see we dropped through the net-lines buy line early this morning but then snapped back and silver closed well above it. This means that at least according to this measure the up trend remains intact. Had it closed below my recommendation would have been to sell the next rip but as things are right now we have to proceed a bit more cautiously. It’s very much possible we are going to see a revenge of the dip buyers which will push Silver toward 50 and possibly even 53. That is where I would probably want to dip back into short positions again.

If nothing else this chart proves my point again, which is that we won’t be able to call a top in either silver or gold. One day it’ll make a new high and the next it will paint a massive drop that makes your head spin (either out of pain or joy). So the only way to play this exponential bitch is with lottery tickets – it’s one of those rare luxuries that I allow myself when it comes to trading.

Let it be said once more that these are not the types of setups I usually propose here – I prefer clear defined resistance/support clusters combined with momentum measures and price patterns that raise the odds of success.

Anyway, the net-lines sell level of 44.61 will be valid for three days – if we get a close below or if we ramp higher to paint a new top we will then reassess and evaluate opportunities to get positioned. Right now I recommend we let others waste theta and patience in some of the whipsaw.

Cheers,

Mole