Precious Metals

Today we've seen quite a jump in gold and silver. However, the big controversy and what many consider the path to instant riches, the "Squeeze JP Morgan's Silver Short" viral campaign, is really the big news as many expect SLV to shoot up to $50 on a short squeeze.

I don't know if the story behind the campaign has legitimate legs or not, I suspect we are not privy to the real nature of JPM's holdings or plans, but one thing seems certain-$30 on SLV is a line in the sand that has been defended vigorously recently. I do not consider SLV a trade worth risking until it can show that it can hold the $30 level.

Here's what the charts look like...

This daily chart shows the high attained earlier in December-exactly $30 on an intraday basis, at that point some heavy selling took place to end the day on high volume at $28.08. That does seem like a defensive play to protect a short and even though we are close to that level today and up 3.5%, I'd prefer to see if SLV can hold $30 on a closing basis and maybe a test of that level.

 The 1 min 3C chart seems to be showing profit taking in SLV today.

 The 5 min chart shows accumulation yesterday and Thursday, obviously someone was setting up a long position to take a shot and it looks to have paid off today. Whether the 1 min chart is light profit taking or real distribution/defense of the $30 level (by JPM), I don't know.

The trade may very well be worth a shot, but in my opinion, the threshold of $30 needs to be taken out, it's just too much resistance and doesn't seem like a high probability trade until SLV can prove itself. It is one to keep on your radar though.