Silver and USO

It appears thus far that buying near the bottom of the range yesterday was a pretty good idea. Its not just because both have made decent moves from there (nearly 7% gain in PSLV from the lower end of the range), but more importantly, whether the trade worked or not, there was an edge there in 3C and buying at the bottom of the range made good sense from a risk perspective.

It's time to start managing the trades. At this point we know there's accumulation, we don't know if this was the last pass at the lower trend line (do we break out of the range from here or is there more work to be done?). I would reccomend running trailing stops behind both trades. This is op-ex week and trade for the last few months has ben very choppy any way, making it difficult to hold any position, long or short, for more then a few days. However, the market is what it is, we adapt or we whine about our losses and how the market action stinks. I'd rather take a profit, even if it's less then what I'd hope for.

Here are some stop losses that I would consider, your own risk tolerance and view of these trades should dictate the room you are willing to give these trades. I'm simply basing them on the merits of their individual volatility while trying to maintain a profitable position, even if it is shortly stopped out.

 SLV 10 min trend channel will keep you at a profit, I'd like to widen this as soon as possible to accommodate for intraday consolidations.

 USO 10 min Trend Channel will preserve gains and move up locking in gains rather quickly, although a wider stop will allow for consolidations.

 The 15 min TC has worked well with USO moves of 2-3 days, although if we get a breakout, the stop will need to be widened to accommodate for consolidations.

For now a 10 bar moving average on a 15 min chart is roughly the same as the tighter stop in USO.

If you are in any of the other silver ETFs or want to discuss stops specific to your circumstances, just email me.