Sunday, July 24, 2011

Trade Update: SLV

SLV is flirting with resistance. You can see the big take down in May which found support at $32. From there the shares rebounded to $38 in June where they were repelled by the 100 day moving average. The shares again found support in late June at the $32 level and began a nice little trend line which has gone sideways just under $40. So, what happens now, will we break $40? Someday and maybe even soon like Monday, but I think we need a pullback first.

First look at the moving average crossover that occurred earlier this month. That is a very bearish signal. Fortunately it is also a lagging indicator and the fact that SLV has traded above both moving averages is bullish. Notice how the 100 dma is turning back up. But you can see how stochastic is pegged near 90 as SLV is trading sideways. So, we have to watch for a pullback next week. If SLV breaks above $40 on the other hand all bets are off and we fill our put our position with another 50 shares.

So, that is what it looks like, for now the battle line is drawn at $40 and we have to respond to the action there.

We got into SLV at $17, got out at $45 and back in at $37. That's why they call it trading, but I got a feeling that when we finally break $40 this we will be able to hold for a long time.

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