Know Your Market
There’s been something wrong with the precious metal’s, gold and silver, for years.
Gold and silver used to move essentially in tandem, over the long term; not anymore.
This link shows there’s a huge divergence in the correlation between the two metals. Gold has launched higher, while silver has lagged.
Right around June of 2020, the correlation began to break down. What else was going on (or being ‘rolled out’) around June of 2020?
Recall, silver’s primarily an industrial metal; affected much more (than gold) by manufacturing demand.
Strategy First
Shown by the market itself, direct correlation between silver and gold no longer applies (or has somehow changed into a new construct), silver’s not confirming the ‘inflation’ shtick, possibly influenced more by industrial demand.
Thus, we have the following.
Silver SLV, Weekly
Just listening to what the market’s telling us, it says, when SLV, reaches a top and inflection point (to reverse lower), it tends to print heavy upside volume bar(s).
Looking at the chart, price action’s all over the place. Wide bars, volume spikes, the gamut.
Markets like this are unstable and usually can’t mount a sustained move in either direction.
Typically, if there’s going to be a breakout (or breakdown), price action tends to get tight, or get itself into a ‘coil’.
Even so, we need to account for the market itself.
Having traded silver futures contracts during the last run up and meltdown from 2011 – 2014, the silver market is thin and likes to ‘spike’.
That (spike) behavior is confirmed by Ed Seykota in Market Wizards and David Wies in his (formerly) daily market updates.
We may be at the beginning of a set-up for a Wyckoff up-thrust (above resistance) and then reversal.
A possible measured move for SLV (to be covered in another update), puts the tracking ETF, right around 25.60, about 2-pts. from where we are now (not advice, not a recommendation).
Stay Tuned
Charts by StockCharts
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point®, trade mark: No. 6,505,279
The Danger Point® 
Good morning, I just want to thank you again for your posts. They are simply laid out and easy as pie to see once you are looking at the charts after reading your notes. I have rewatched the Weis and Elder Caribbean seminar and really got more out of it now then watching it for the first time 2 years ago. Thank you for ALL the effort and time you spend doing this for us!!!! I look forward to each and every email saying there is a new “Danger Point” post!😀
FWIW I really see the XBI layout after you posted it – went in small on LABD (a 3x leveraged inverse ETF on biotech) last week with a really tight stop. got stopped out for a very small loss. I see 92.50 as possible resistance now and yesterday after XBI opened strong up to 92.20 I pulled the trigger again on LABD with a tight stop. After it reversed down pretty good at the end of day my gain was almost 8%. Holding to see how things develop. As long as a big gap up at open with XBI doesn’t happen (which is always possible) I will manage the trade by taking some partial profit and leave the existing stop where it is.
Have an awesome day. I wish you and yours the very best of health and happiness!!! Richie
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Very kind words … thank you again, Richie,
Good work on positioning in LABD. It’s one of those inverse funds that’s great when going in the anticipated direction. It’s a beast when it’s not.
I do not discuss any open positions that I may be in, but one can infer (as you have done), that if I’m talking about it from an ‘opportunity’ standpoint, I am either in the position or about to take one.
In a rare case, like with Nat-Gas, UNG, it turned out to be a year before there was a real opportunity.
As for biotech XBI, I am working on another post now, and will most likely release the update about an hour after the market opens.
Stay in touch,
Regards,
Paul
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