SLV is one of my least favorite equities to try to get an edge over, mostly because we really don't know how big or how much of JPM's inherited short on silver (from the Bear Stearns takeover) is still floating around out there.
Last time Silver broke out and put Blythe Masters and JPM in danger, someone made a phone call to the COMEX and they hit silver with 5 consecutive margin hikes, this was the result...
Approximately a 30% decline in about a month and ultimately a bit more then 40% . Remember, the F_E_D kind of owed JPM for helping them out with Bear Stearns.
It may be partially because of that, that we see so few good signals in silver, it may be smart money isn't willing to go up against JPM. Whatever the case, Silver is undervalued on a geological basis (what's in the ground compared to gold).
Here's the loose correlation with the Euro.
On a daily chart, here's the inverse correlation with the dollar index.
Today intraday, the correlation with the Euro tightened up significantly, although volume fell off as the Euro looks set to decline overnight again.
On a 60 min chart, SLV has been in almost perfect confirmation with 3C, except late today, but that is because the 60 min chart can't move as fast as silver ran up.
On the 15 min chart we can see a positive divergence as silver was trending down slightly, it was under accumulation and that launched the current move we see, there was a slight negative divergence that started as confirmation and ended up causing SLV to go sideways until the next positive divergence (white arrow) kicked in and we have had confirmation since. Except again today but again, the 15 min chart may not have caught up to SLV's move.
The 5 min chart would have caught up and went from god confirmation of the uptrend to what looks like some profit taking in to strength today.
The 2 min chart shows more detail of smaller moves, the positive divergence of the 23/24 and confirmation with a slight negative in to today's highs. I would expect a falling Euro to have some downside effect on SLV, but until the 15 min chart catches up, how dramatic it is is unknown.
The 1 min chart certainly is fast enough and shows the same thing, negative into today's highs.
We did have a bullish crossover and if we saw a pullback, my guess is it will be to the yellow 10-day average.
If I'm trading this as a position and willing to ride out a pullback, then I'd use the daily Trend Channel with a stop slightly above $30.00
There also seems to be a resistance zone in place, this may be JPM's new line in the sand.
Overall, any new positions I would wait for a pullback, otherwise current longs, I would use the wider trailing stop above.
No comments:
Post a Comment