SLV Put Trade Updates

Yesterday on a precious metals pullback, following the lead of gold (and silver) miners as they seem to be reverting back to a relationship not seen in years under the QE regime, of miners leading precious metals, I put out a speculative (1/2 size position with a July standard expiration which is long for a pullback move) trade idea, Trade Idea: (Short Term Spec. Options) SLV Puts.

This morning's Final Q1 GDP shocker sent gold and silver higher in pre-market knee jerk move, with the net effect of sending the SLV put down from a 10% gain to a -15% loss, which is not as bad as it sounds for options with that much time for a move that should be a lot faster (pullback).

As with the rest of the market, things are pretty tame even in the knee-jerk PM complex. SLV is up .70% with a daily candle with a long upper wick denoting higher prices were rejected this morning and GLD is up about .15%, both are in areas of overhead and stage 1 resistance, SLV is at the gap from 3/17-3/18 which acts as resistance.

As for the charts, again, a bit tame... GLD charts are very similar in concept, but all around look worse, I may entertain the idea of a GLD put or at least put the idea out for those who may be interested, especially if you didn't go with SLV (not much risk management reason to take both if they are on a speculative basis/half size positions) so if GLD puts do come out, it's because I think the edge is very strong for the pullback.

 On a primary trend basis or longer term trade, there are few longs looking as good as the precious metals complex, this is a 4 hour SLV 3C chart with strong accumulation at lows of the stage 1 base area which ended with a leading positive as SLV broke to the upside making 3 month highs in no time .

The intraday charts were the reason for a "pullback" position and that's also why the leverage of puts were needed, on a straight SLV short, the profit potential is not there to bother putting the money to work and at risk in the market.

 A closer intraday view of the same chart shows a small positive toward the close yesterday that held up this morning and in line since, the dull part.

The same is true of the 2 min chart, the leading negative was the reason for the trade idea, but on a closer intraday view...

 The 2 min has the same positive divegrence at the same place late yesterday and the same dull in line status today.

The 3 min chart gives a pretty clear pullback signal, yet intraday it is bouncing about in line, however this is still in leading negative position for a pullback as this is still only a 3 min chart.

And the story is the same with a 5 min chart so there's not a significant positive divegrence and mostly in line intraday trade so I suspect a pullback is still very much a probability so for now I plan to continue to hold the put position.

As for Silver Futures, they look a little worse and more in line with the pullback trade idea.

 1 min intraday Silver Futures never went positive this morning and remain in a leading negative divegrence.

 5 min silver futures are onboard with a pullback move

As are 15 min

And the 30 min shows the uptrend confirmation at the green arrow as price moves sideways (note the increased price ROC to the upside just before the lateral range formed, again, seemingly bullish price behavior is often a red flag for a change of character, even though this is a short term change, the concept is fractal and works on all timeframes.

As for potential Trend Channel breaks and stops...

 Amazingly the tight 60 min Trend Channel (this is why this one an award, it's ability to adapt to most recent trend behavior unlike envelope channels or wild Bollinger bands) held the entire trend up, including now. A move below $20.13 on a closing basis should usher in a pullback.

As for the daily Trend Channel, it has a stop of approx. $19.40, although it will continue to lock in gains, this is a fairly small pullback of only about 4%, thus the need for leverage, however if it was a deeper pullback that filled the gap in the $19 area, I don't think I'd panic so long as the longer 3C charts held up.

I'll continue to hold the put position for now as I think it will work out.