Friday, January 14, 2011

Trade Update: SLV

We were stopped out of our SLV today at $27.50. The shares traded down to $27.45 and have since recovered to $27.74, but I am not uncomfortable. In the chart you can see that $27.74 is a long way from the 200 dma of $21.25. Stocks don't usually trade that much off of their 200 dma for very long, but SLV has been running away from it's 200 dma since October.

SLV has traded to the $30 zone twice since December and has been turned back both times and currently risks a breech of it's 50 dma. Such a breech could portend a mighty fall as the momentum measured by the stochastics and MACD are both diving and showing no signs of pulling out.

We took a 1/4 position at $26.32 and the rest at $27.04 back in November for a cost basis of $26.86. Our loss is not significant and it is highly more likely that we will be able to buy shares of SLV at a lower price after a pull back than it is that we will have to chase it above $30.

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