Trying to catch a falling silver knife? S&P lower to go?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
The daily silver chart below shows the damage bears have inflicted.
There is a high-risk long trade opportunity still active; as I wrote Monday, I expected the bleeding to slow down or stop (for now), and so far, that is occurring. The trade here is to play the retracement (which could turn out to be nothing more a re-test of the breakdown) back to the 22.20/.35ish spot level.
Zooming out to the weekly timeframe, we can see a coil forming in stochastics (black arrow), with price support at the very long-term horizontal line at $18.50. Should the momentum coil break to the downside, the price will likely follow through lower.
Stackers can probably afford to: wait for silver to come down to that long-term support, or wait to see if bulls can get the price back over $22.30 with conviction in a hurry, as the momentum coil breaks upward from here (instead of downward). That would likely print as a bullish “V” reversal in price. I do not know which scenario will play out, but I do know that my contrarian senses are activated; discipline and agility remain paramount.
A little bit more patience could help participants save the emotional reverberations of getting cut trying to catch a falling knife, but nothing is free. In this case, the cost may be missing the initial upward thrust if the price does, in fact, V reverse.
As for the S&P, I would let the rising trendline be my guide. A move back above is bullish for a continuation to all-time highs. Bulls' failure to get prices back over the line with conviction, and I will begin to look forward to the price hitting the 200-week moving average below.
Thanks, and have a nice day.