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Monday, May 16, 2011
The Silver ETF SLV-daily chart-50,100,200 DMAs
Silver has had a historic downdraft after rising from 18 in August and the high 20s in February to test the $50 level. Crashing off the top in massive volume, silver has broken the 50DMA and remains about 10% above the 200 day. The pattern from the top has formed what Chapman Wave creator Basil Chapman calls a “dreaded h” and that, folks, ain’t cheerful news.
But Friday’s action formed a doji and tested and held the 100 day/20 week moving average. We will soon see which of these moving averages (and the 100 is the least followed) will provide a base. The doji is an indecision point and often signals a reveral after a trend in either direction. The upper and lower shadows indicate that sellers came in when the price rose during the day and buyers entered when it fell.
The market news is all negative..the dollar gaining strength…the Straus-Kahn arrest (what was he thinking?)..Greece etc..and although the fear-gauge vix does not indicate it, everyone I have communicated with seems scared.
The Daily VIX: 17 level does not indicate much concern.
I added some physical gold this week-end from a baseball card dealer raising cash. Went to pick the coins up and was amazed at the number of dealers and the number of active buyers at the show. This is a small monthly show that had about 20 dealers and I was surprised at the sophistication of the grading and displays.
Everything looks like a bummer week for markets-seen everything from S&P 1425 year end to retest of the March, 2009 lows. Everyone is predicting a catastrophe for the metals..but when opportunity presented itself I bought physical. The 50 retracement levels from August to May high are right around $33-34 and a .618 Fib is in that $30 range which is where a falling price will meet a rising 200DMA…if that proves to be a base, physical will trade in the $35 range on the most popular items…so we may be pretty close to a base right now.