Very interesting, possibly telling chart

[theo]

TA can be useful under certain circumstances, but it is particularly questionable when it comes to the current silver market. It is a thinly traded and most-likely manipulated on both the buy and sell sides. Doing TA on silver right now is kind of like closely studying the injury reports and player tendencies concerning a college basketball game that has already been fixed by the mob.

[RR GUY]

Looks like technicals aren't dead!

If the extreme technicals worked on calling the correction, then they are now telling me to BUY-BUY-BUY.

We are riding along the 20 SMA...I'm in SLV at $43.72, Cut losses at $42.50, take profits at $46.

As I said last night, buy silver spot below $44.50...the 20 SMA is a perfect entry point for this play.

Downright sexy chart. Circled in green are my bullish reasons.

I would wait to see if the 50 day MA holds. A test of the 20 day MA is hardly a consolidation. Your $42.50 stop loss is very tight, and you can be taken out of the position within hours of putting it on. We have seen that given silver's recent volatility it trades in wide bands during each intra-day session. Just my two cents. We will probably trade in a narrow price range for some time now, so I don't see any point in trying to rush in.

[DeanStockwell]

I am predisposed to using tight stops. I am quick to adjust them throughout the day, and most of my stops are not hard stops(automatically executed).

Let me be clear that I believe silver is overvalued right now. A g/s ratio of ~30 is ABSURD.

But our patient is about to enter into a stage of mania...I do believe. It is HIGHLY uncertain to trade within a tight range now...as I said I believe we will see ridiculous amounts of volatility.

That is why I warned against leveraged ETF's last week...holders of AGQ are going to get burned, and they have started cooking with this 9% swing. AGQ loaded up on silver contracts at the end of the day when silver took a humongous drop, therefore the gains will be minimized tomorrow.

As to not rushing to get in...Look at that chart!
Silver up $1.20 in asia...good, good. At $46 I will switch to short silver long gold and ride this until we see a g/s ratio that is approaching rationality.

Let's see if NY will crash silver back down or extend the gains!

[DeanStockwell]

TA can be useful under certain circumstances, but it is particularly questionable when it comes to the current silver market. It is a thinly traded and most-likely manipulated on both the buy and sell sides. Doing TA on silver right now is kind of like closely studying the injury reports and player tendencies concerning a college basketball game that has already been fixed by the mob.

The silver market is not as thinly traded as many here believe...at least not in New York.
I do believe the modus operandi of this metaphorical mob you speak of is using technicals to justify their manipulation, if there is any presently;

However silver is very vulnerable to whipsaws because of the extremely volatile nature of silver...this could be manipulation, although it seems that there is more upwards manipulation going on right now than downwards...

A bit funny since JPM got rid of those short positions; hm...don't find them I suppose.

[DeanStockwell]

For Dean, still willing to learn. Guess the question I would pose to you, which I pose to my analysts when something goes wrong, is this, if you would answer it. (Apologies if you did further above, because I haven't necessarily caught up with all past posts.) Looking back a few weeks, is there something that you now think you should have considered differently, within TA, that would have led to you to a different - and correct - conclusion of what has happened very recently? The reason I ask this is the most important thing is to be able to correct mistakes going forward. I'm asking specifically about silver because I would dearly love you to be able to accurately predict the next top (especially if you share it!).

-I got caught up with ADX which is can be either a leading or a lagging indicator...I misinterpreted the signals as a bull that was running out of steam but the ADX verified that it was just an extremely powerful bull.
-Whipsawing in the markets caused some of my stops to be eliminated in april...twice I missed out on breakeven and even a minor profit then ended up losing rather large amounts.
It is much easier, I think, to call bottoms in an upwards trending market than tops. By looking at this chart which utilizes EMA envelopes, you can see that it is wise to buy when the candle hits the bottom envelope. With stops, this strategy would have not failed you, and you would have reaped large profits.


I'd like to mention that I didn't switch to a silver bull...if silver hits $45.97 I'm moving into a short silver/long gold play which will profit as the G/S ratio increases.

Good luck everyone, feel free to ask any questions!

[RR GUY]

I should have said that I believe silver is range bound. Not necessarily a "tight range", but I believe it could trade between $40-50 for some time before we see the next move. With COMEX hiking margin requirements for the second time in a week, we may see lower volatility which will temper the fever. If you are trading the asset, then sure, your strategy makes a lot of sense. For long-term holders like myself, we are continously waiting to see some shakeout of the weak-hands before I believe we can move higher. Some base building in this price area would only be beneficial for longs. We'll just have to watch and wait to see how this plays out.

[68Camaro]

Agree with our new guy here that there is a high probability of going "sideways" for a time, which I also previously noted. Don't know what range. It may be 40-45, or a couple points lower or higher. But sideways, nevertheless. I have continued to buy physical as certain opportunities have arisen, and while I violated it for a couple of small purchases, my price limit has been and will be for the near-term 45 for 99.9% (not counting a couple buck premium for ASEs specificially) or 33x for 90%, and I will be looking for opportunities below that as weak-hands shake out. I think we might have 4-8 weeks of this, combined with a lot of volatility, though I think more toward 4 weeks.

This "feel" doesn't constituent technical analysis, and I wish it was more quantifiable.

[Lemon Thrower]

dean, no disrespect but how can a chart factor in manipulations, changes in comex margin requirements, etc.

if you look at a long term chart of the silver price and compare it to the money supply, you would see an even larger divergence - what you call overbought - that only now is beginning to narrow. would that chart lie?

charts don't lie but they don't convey nearly the amount of information that technical analysts claim they do.

[beauanderos]

dean, no disrespect but how can a chart factor in manipulations, changes in comex margin requirements, etc.

if you look at a long term chart of the silver price and compare it to the money supply, you would see an even larger divergence - what you call overbought - that only now is beginning to narrow. would that chart lie?

charts don't lie but they don't convey nearly the amount of information that technical analysts claim they do.

Ditto; don't you think those who manipulate can read charts too? And will use pattern setups at precisely the moments that indicate entry points to crush, again and again, new participants on the silver train? Look at how they repeatedly hike the margin requirements, now three times in two weeks, AFTER hours, during the most thinly traded time of day, so that the expected downward trend is exacerbated during the absence of buyers to offset the effect. They know the weak points, they know the stop loss limits of the biggest traders in SLV, and they intentionally, time and again, trigger those stop losses by whatever means. The only thing you can count on is, that within a few days after they act, the market will start to rise again as they buy back some of the shorts they just sold for the Nth time. They are "masking" their activity this time by conducting their acts within the traditionally weak period of the year for metals... "sell in May, and go away," so that nonbelievers in manipulation aren't fed fodder that could arouse and enrage new "conspiracy" theorists.

[68Camaro]

...what he said...

[Jonflyfish]

dean, no disrespect but how can a chart factor in manipulations, changes in comex margin requirements, etc.

if you look at a long term chart of the silver price and compare it to the money supply, you would see an even larger divergence - what you call overbought - that only now is beginning to narrow. would that chart lie?

charts don't lie but they don't convey nearly the amount of information that technical analysts claim they do.

I know this wasn't directed to me but with kind permission, I'd like to comment.
Price is the ultimate indicator. People say thin market this and manipulation that, but I am here to affirm that a trade takes place where two parties agree on price and disagree on value. One can report information, mis-information, or dis-information for that matter, but when money enters the market, price discovery becomes reality, regardless of one's emotional need to feed themselves with fantasies and other supporting feel good stories to nourish their natural mental biases. This natural desire is also an investor and trader's worst enemy.

When price is known, the collective market has spoken. This makes analyzing price useful above all else.

Cheers

[Jonflyfish]

TA can be useful under certain circumstances, but it is particularly questionable when it comes to the current silver market. It is a thinly traded and most-likely manipulated on both the buy and sell sides. Doing TA on silver right now is kind of like closely studying the injury reports and player tendencies concerning a college basketball game that has already been fixed by the mob.

Couldn't disagree more. TA is particularly useful in the current silver market. Your comments reflect that of someone who does not understand TA.

BTW- Nice thread Dean.

[DeanStockwell]

Agh. Those falling knives again. Thankfully I didn't lose too much with such a tight stop.
I'm hoping for an upwards rebound in silver so I can enter into my G/S ratio play, but I'm not betting on(or against it).
This is a large correction, and it still may not be over.