Friday, November 12, 2010

Trade Update: SLV

We are long SLV from just under $18 a share, and looking at the chart it certainly looks over extended. You can see where it gapped up and ran miles away from its moving averages, going all the way to $27.81, before crashing back towards $26 under heavy volume. You will often see volatility like that at the end of a run, but the run for silver is just beginning. So, what gives?

First silver is simply reacting to be cut loose decades of depression by the Federal Reserve and other evil entities, deemed too big to fail. Secondly, the exchanges altered their margin requirements without warning, which forced a lot of volatility on this market. It appears however that $26 is providing fairly decent support for the SLV. Just to be clear, we are trading the SLV, and will go short somewhere under $24, if it gets there. But if you are holding physical silver, then just continue holding it for years and years to come.

Now look at the intraday chart in the 15 minute time period. Now look at the intraday chart in the 15 minute time period. You can see the gap up and reversal on heavy volume last Tuesday. But $26 seems to provide decent support in this time period as well. So, if you are long silver or silver mining stocks you should be good, as long as SLV stays above $26.

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