Monday, April 14, 2008

Trade Update: SLV

We are short SLV a full position from roughly 179.00 and it closed at 175.78 on Friday. This trade may not be for the faint of heart. The economic news is all bad and the FED is dropping the worth of a dollar like a stone and it is really the US dollar who has the fate of silver in it's hand both short and long term.

As for SLV look first at the weekly chart and weekly MACD. First you can see the MASSIVE topping formation of the seven to four weeks ago. That alone should have scared the hell out of the longs. It scared the hell out of me, that is why we are short. But look at the MACD and notice how the blue line is crossing the red line. This indicates that the momentum to the down side is about to accelerate. This could provide a profitable short trade and extra cash to go long again at a great re-entry point near say $140-$150 per share. This is something I thought we never see again and we could conceivably see it as soon as next week. But before I get ahead of my self we could also get stopped out with the next round of earnings disappointments and rate cuts. So we put stops for 1/2 position @ 183.56 and a 1/2 position @ 185.75.

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