iStock_000002530720XSmallFMX Connect- WWW.FMXConnect.com  (Reported on 6/14/2011)

Sell Silver Now!








Yesterday we made the call to get ready to sell Silver after seeing our Bollinger Band/Implied Volatility indicator signal conditions were right. July Silver tumbled $1.59 on the day, validating our recommendation. Our indicator is saying to stay short with a stop-out at $35.95, the 100 day moving average. The first objective is $34.00. A settlement below 34 should drive the market to 32. Ultimately, we think the market could drive all the way down to $26.30 but would gradually take profits every step of the way.

 

Technical analysis from GRI provides further support for our bearish view.

1. Market showing a breakout under a previous daily swing low and should quickly extend selloffs. Failure to extend the breakout now alerts for a bear failure. A close back over 3581.44 signals a breakout failure and turnaround.

2. Yesterday's close signals breakout under a previous daily swing low and should prompt continuation selloffs the next 1-3 days. Sustained trade under the previous low will help motivate selloffs. Corrections should not close above 3581.44 to maintain the breakout.

3. The downside objectives for this formation range from 3427.00 to 3227.00 with a close over 3659.56 needed to negate a bear trading stance.

4. Market is within proximity of this week's projected support range of 3069.12-3461.10, which may provide a likely zone for bottoming action or rebounds.



Below are the conditions we described yesterday. Currently, our indicators are saying to stay short.


Simply put:

· If the daily Bollinger Bands widens in OPPOSITE directions, you are to go with the direction of the midline (red 20 day MA in chart).

· If the above happens, your stop out is the 20 day Moving Average

· It is not worth predicting which way the market will go, and it is best to let the indicator tell the tale.

· The 100 day MA is right here (blue line) and the 50 day is the green line above.

For our part we are buying hedged 40-delta silver calls in our personal accounts for multiple reasons now. We lean toward the bearish side, but are non-committal and thus are using options.

Secondarily we will put on a futures position on a decisive break in the pattern.

If you wish you learn more contact us. 

 

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