Look Ma, No Froth on Silver!

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Look Ma, No Froth on Silver!

By: Charleston Voice

-- Posted 18 April, 2007 | | Source: SilverSeek.com

The beauty of this silver expansion is that it's advancing in baby steps. Yes, on balance the volume is up, which indicates sellers have gone away which is accounted for by the shaded green bars at bottom of price chart. What's nice is we have this baby step pullback this current week with a red-shaded bar without rocketing volume which appears at cyclical peaks. We've yet to see weekly volumes up to nearly 3 million shares where past corrections have occurred.

MACD bars are still positive (just barely visible), and the SlowSTO black line is still over the red, and still a distance from the elliptical blue area shown on the indicator feature. The RSI must get closer to 70 to flash us a warning.

Additionally, the 7-wma appears to have turned up now with the candlesticks breaking back up through this moving average (indicated with blue arrows).

However, at this juncture I feel the Risk/Reward element is now tilted toward the belief that a Buy in here is more risk than reward. Investors that bought in mid-February around $13.50 are now only breaking even. Your emotions may tell you "I can stand the pain of a pullback & then wait another 6-8 weeks to get it back. But, hey, I'll sell before that happens!" No, you won't. You'll ride it all the way back down again. Your gut will be aching. Only buy the physical in here with a longer time frame, say a year or more. Beat back those emotional tugs that way. Purchases in this zone should be for deep storage custody.

To this point we have not been waxing with irrational exuberance. My absolutely best short-term trade on selling in this cyclical bull was selling on May 20/21 of 2001. The absolute top for that run. The selling in May came alright, but not until the latter part of the month. I think this rally will extend well into May.

Other things to watch for an impending pullback:

Gold/Silver Ratio
10 & 30-year bond yields
US dollar "bounce"
Gold/Oil Ratio
Gold/HUI Ratio
COT Net Commercials Short Positions (http://www.softwarenorth.net/cot/current/charts/SI.png )

This is not a comprehensive list, but good stuff to start with.

-- Posted 18 April, 2007 | |

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Last Three Articles by Charleston Voice

Silver on the See-Saw
22 September, 2007

Silver COTs & Barclays
17 September, 2007

Boil Them in Oil Over a Slow Fire
5 June, 2007
Charleston Voice - Article Archive List

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