Friday, June 3, 2011

Trade Update: SLV

Looking at the 52 week chart of SLV shows that the 100 day moving average continues to provide support. That may not continue and even if it does it may not be such a good things for longs.

First notice how the shares touched the 100 dma briefly yesterday before settling at $35.29, the 100 dma is $34.03. Now look down at the stochastic, it has turned over from the overbought range and is heading down. What we want to do now is to see where the share prices are when the stochastic has gone all the way down and starts turning back up again. I suspect that SLV will go at least down to the nearest support at $32.50 before that happens. That action of course will stop us out. No self pity needed , it's just the way we play the game.

The second thing to notice is that the 100 dma itself is flatting out and rolling over. Support by the 100 dma is useless if it's slope is negative.

Now look at the 10 day chart in the 15 minute time period. See the gap up to $35.00 and the break away to $37.50. Yesterday SLV retested $35. After a brief break the shares closed above $35.00. Will $35 continue to hold? There is no way to tell, but as I said above I think that with the stochastic poised to crash we are looking at a trip at least down to the $32.50 zone.

Right now I want to move our stops from $34.39 down to just under the 1oo dma. I like $33.39 since it gives the shares some leeway and limits or total loss on this position to $200.

Move sell stop to $33.39.

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