Silver on an Island

The silver hype couldn’t even last for a single day.

Price opened gap-higher on Monday and then steadily eroded to close lower; posting a reversal bar on massive volume.

The next day, yesterday, the trap is shut. Island gap reversal.

Way back in Livermore’s time, in his (fictionalized) biography, he says the big players can’t get in and out whenever they want.

Their positions are so large, entering and exiting would cause huge moves in the market. They need to have an “event” with massive volume so as to hide their actions (entering or exiting).

The pre-market update on Monday proposed the whole kabuki theater with GME, then SLV could have just been a ruse for big players to establish massive SLV (or futures) short positions; or just plain exit out entirely.

That idea doesn’t sound so far fetched now.

We’ll have to see if it’s true at the next commitment of trader’s report.

Either way, it’s not really important to dive into the minutiae. We can just look at the chart.

As Prechter likes to call it, massive volume signifies a “changing of hands”. Most likely from strong to weak (i.e. from professional to retail).

The significance probably invisible to the public, this may be the inflection point.

Now that SLV’s at a potential long term pivot, we could be at the cusp of a deflation impulse.

Commodities (like oil) along with real estate, one of the most illiquid of all markets, get crushed in a downturn.

Stay Tuned

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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.

SLV Up 10%, Can it Hold?

The short answer is, probably not.

Is anyone looking at the technical condition? No, it’s all about ‘putting it to the man’.

In all of Wyckoff’s writings, he never once proposed the idea of taking the large controlling entities for a ride.

He was totally immersed in figuring out what those entities were trying to accomplish; then getting on the right side of the trade.

For all we know, the whole hedge fund blow-up, kabuki theater could have just been a sacrificial lamb (an inside job) targeting silver for a massive short opportunity.

How’s that for strategic thinking.

Right now, in the pre-market, SLV is right at new recovery highs.

The real question should be, ‘how long can the hype last?’

Can it finish the week at new highs and post a bearish divergence on the weekly MACD?

Price action itself will decide. What we do have, is risk being removed on the short side.

Inverse fund ZSL is down a stiff -21%. If there is a short, that’s the one to watch (not advice, not a recommendation).

It’s important to note, GLD is nowhere near a +10% move. It’s a non-confirmation on silver.

Separately, the overall markets are trading higher but appear to be under their prior session (daily) highs … indicating a short position in those markets is still viable.

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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.

Gold & Silver, Retrace Levels

If GLD and SLV maintain their pre-market, 181.40 for GLD and 23.15 for SLV, they will both open at 38% retrace levels.

They each have attempted to reach these areas two times in October and were rejected.

The last update stated that Junior Mining Index, GDXJ has its own Fibonacci level (38% retrace), in the vicinity of 56.80.

Pre-market activity for GDXJ is around 56.38 … very close.

In Wyckoff terms, yesterday’s trading activity for GDXJ was a Sign of Supply.  The index opened lower then tested (higher) and subsequently moved lower throughout the day into the close.

This firm’s trading action (not a recommendation, not advice) will be to monitor the first two hours of trading (GDXJ) to see if we tap the 38% retrace level and subsequently get hourly reversal bars … or some other indication of reversal.

We’re already short with a combined price of 10.93, in JDST. 

Currently, JDST is pre-market trading at 10.40, which equates to just over a 5% loss on the open position. 

Certainly that’s not desirable but then again, if this is all the market can hit us with, we’re willing to wait it out … although not for too long.

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.

Trending: Biotech

Today’s action may be in a trading channel.

It’s a Fibonacci eight days from the low of September 4th, to the top on the 16th.

That time correlation, along with the channel hits, help to provide validity to the set-up.

Our short position in the sector has not changed appreciably.  There was a slight backing off yesterday, by reducing the size about one-percent.

However, during today’s action as IBB was making intraday highs (BIS making lows), the short position was increased, via BIS.

In any event, we have a hard stop at the day’s high, IBB 134.85, which is approximately 31.46, on BIS:  Not financial advice, not a recommendation.

As of this post, 7:00 p.m., EST, the S&P 500 futures are trading down about -0.50%, giving the inference that downside action will continue at the next session.

Silver futures have dropped another 4.5% – 5%. Price action’s heading straight down.  Nearest chart support for the SIZ20 (December) contract is around 20.00.

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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.

Silver Freak-Out

It’s all starting to sound like the global warming scam. 

‘It’s only ten years before all the ice caps will be melted’.  Problem is, it’s only been ten years for at least 40-years!

Note:  For a total evisceration of the AGW narrative (or hoax), Tony Heller has done an excellent job.

Which brings us to silver and the boogeyman of ‘hyperinflation’s just around the corner’.  It could be the latest false narrative that’s not panning out.

At some point, the dollar will go to zero.  That’s well understood by anyone with a modest amount of financial knowledge.

It’s what happens before that; that’s what’s important.

Even J. Bravo, is starting to think it may not be a slam dunk to dollar zero.  He had a guest on a while back that got howls of disapproval with his deflation (first) assessment.

Not saying the premise is right.  Just saying when there’s that much of a consensus (hyperinflation), it has a nasty habit of not coming to fruition.

As always, anything can happen.  We could get hit with a solar flare or a massive volcanic eruption throwing everything out of balance.

Matter of fact, both of those are highly likely right along with a near earth miss, asteroid passing within 13,000 miles … tomorrow.

In the meantime, we’ll focus on typical market behavior.

The last update stated:  “Barring any additional upside, the expectation is for price action to retrace and test the wide, high volume chart areas.”

Fast forward to now.  There was just one more blip higher before silver began its correction in earnest.  This is normal and expected market behavior. 

The chart shows there’s potential to go all the way back to support levels at the 17-area.

However, it’s also possible we’ve seen a top and silver’s headed to new lows (time stamp 3:10); That’s completely opposite the consensus and potentially a more likely result.

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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.

Silver Top?

The silver bulls may have been sufficiently trapped.  If so, they’re subject to a beating via reversal.

2017-02-10_6-36-21-borderThe markets aren’t friendly and silver’s one of those that never takes prisoners.

As mentioned in an earlier post, even trading genius Ed Seykota (of Market Wizards fame), early in his career, was impaled mercilessly by silver spikes.

As always, anything can happen and some new demand come in to lift SLV higher.

However, when you look at the typical form of a silver topping pattern, it looks like we’re there.

If there’s a caveat, the chart pattern insert is on a weekly basis and the current chart is daily.

Markets are fractal.  Patterns can (and do) repeat at all time-frames.

Barring any additional upside, the expectation is for price action to retrace and test the wide, high volume chart areas.

2020-08-21_15-42-55-SLV-Daily-Close-3-bar-notes

 

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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.

Corn Flattened

Ten percent of the U.S corn crop was instantly wiped out last week during what’s described as an inland hurricane.

The video here goes into more detail about correlating events.

iStock-1019396932To limit the food supply even further, driving prices higher under the guise of inflation, the ‘speck’ (time stamp 6:00) has invaded 100% of tested agriculture workers in California.

The corn ETF mentioned at Time Stamp, 4:16, in the linked video is shown below:  CORN is the ticker symbol.

The ‘drecheo’ breakout is clear.  Currently, CORN price action has retraced slightly and is testing support levels.

2020-08-19_9-20-04-CORN-Daily-4-bar-notes

In separate markets, biotech (IBB) has posted another sell, sell-short signal with this session’s new daily low (not financial advice).

Silver is reversing as expected.

Whether or not this is just the beginning of a long down move to form new lows (for SLV), is unknown.  Of course, such a position or thought is, completely opposite the consensus view.

 

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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.

Silver … Straight Up. Now What?

From bottom to top, silver has exploded over 147%, in less than three months.

In the process, a wide high volume trading range has been created.

So, what happens now?

shutterstock_55919800A likely answer is, go back to silver price action under similar conditions.

That behavior can be summed up as a ‘test’.  It’s the nature of the markets to test wide, high volume, (near vertical) price action.

Just what does test mean?

The financial pundits will typically call this type of action ‘consolidation’, but that’s a misnomer.

A test can pass or fail.  If the silver market retraces from here … or goes a little higher before a retrace, the nature of the retrace price action is important.

Using the SLV chart shown at the bottom of this post, we’ll be looking for how SLV behaves if and when it comes back to the resistance area … which may now be support.

The last update on silver hinted at a potential new low coming some time after the current run.  ‘Some time’, may be months or years.

Let’s step aside briefly and discuss market reality:

Completely contrary to what is espoused in the financial media, money is not ‘at work’ in the markets.  It’s ‘at risk’.

Fotosearch_k0729352Upon entering a position, any position, a tacit agreement has been made by the new entrant and the other participants.

That agreement is to voluntarily walk into what’s essentially the Roman Coliseum.

The longer you’re in the ring, the more chance you have of being gored, mauled, or eaten alive.

So, how does one minimize that risk? 

The answer is (from this firm’s perspective), wait for the set-up, no matter how long and then move quickly.

Here’s a prior update that’s a good example of how a trade opportunity was identified seven months in advance; then executed for a 155%, gain in just five days.

End of digression

As for silver, it looks like time to wait.  Bullish sentiment at this juncture may (if not already) have reached an extreme.  Price action typically reverses at high sentiment levels.

The SLV chart has two prior reversals identified.  Those reversal actions are similar but not exact.  If silver is to re-test the recent lows, we’ll be looking closely at how it behaves as it returns to potential support levels.

2020-08-08_8-01-01-SLV-Weekly-1-bar-notes

 

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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.

Silver Up, Then Down

Let’s take a look at silver’s upside breakout.

First off, silver spikes as seen in the chart below, are nothing new.

shutterstock_6325966

Even trading genius Ed Seykota lamented in his interview for Market Wizards (1989) about getting ‘impaled’ on numerous silver spikes.

It’s just the nature of the very thin market.

For example, as of this post, there are 176,008 silver futures contracts active (Open Interest) out to January 2021.

That compares to 835,037 active gold futures contracts for approximately the same time-frame.

So, at this point, the gold market has over 370% more active futures contracts than silver.  Silver is indeed a thin market; therefore lending itself to radical (spike) moves.

The spike lower in March and then higher over the past week, is quite evident.  However, if we pull out and look at the big picture, there’s trouble ahead for the bulls.

2020-07-25_12-38-36-SLV-Weekly-1-bar-landscape-notes

On the SLV chart is a massive multi-year resistance zone in the 23 – 26, area.

Not only that, it’s a 38.2%, Fibonacci retrace of the entire down move from the top in April of 2011, to the bottom in March this year.

Thus, price action itself implies that silver (SLV proxy) is still in a bear market.

The chart allows for the probability of further downside action once the upside objectives are met.  We can see a hint of that downside objective (circled) as somewhere below the 2009, lows.

Of course, expect the market and analysis hysteria to ramp up as (or if) SLV approaches the 25-area.

If or when that happens, we’ll be looking for clues that a reversal is imminent or if by some other measure, “this time is different”, suggesting that silver will continue higher.

 

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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.