Fascinating pair of charts showing the carnage in Silver via SLV.

If the $35.76 level is not retaken, and relatively soon, its lights out for the poor man’s Gold. That could bode poorly for the shiny yellow metal as well.

>

Daily Silver Chart

click for ginormous graph

>

Silver 30 Minute Chart (2 Weeks)

Category: Gold & Precious Metals, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

20 Responses to “Ugly Chart of the Day: Silver”

  1. Dow says:

    Irony is not dead! On the same day you post an article about JPM hunt for gold no less….

  2. Mike C says:

    Just my opinion, but my read on the chart is 35.76 is of little if any significance long-term. We bounced really hard today off the intermediate-term trendline connecting the August breakout and January reaction low. Gonna wait another 45 minutes or so to see closer to the close, but probably going to close my puts today. Given the magnitude of the upmove, holding this trendline would be very positive, and I think one could stay constructive on the secular long-term move as long as the January low holds. Base case scenario is probably a very long (12-18 month) consolidation between 25-40.

  3. postman says:

    Glad to see your comments on an “alternative investment.”

  4. nofoulsontheplayground says:

    The SLV support at $30 ought to hold the first couple of times it’s tested, but ultimately it looks like $26 is in the cards according to that chart regression pattern.

    There’s also a possible H&S top that targets around $20, but that may be a little bit of a stretch right now.

  5. ben22 says:

    I’m with MikeC, $35 area doesn’t seem nearly as critical as the $28-$30 zone.

    really though it’s just been ejoyable to watch the bugs stay in denial about the eveningstar doji at the top

    Primary trend is still up here but there may be a few more Johns that need shaken out

  6. Chief Tomahawk says:

    Is JP Morgan really searching for precious metals in Afganistan, or looking to stash illiquid CDOs, CLOs, etc.?

  7. Mike C says:

    Yeah Ben, need to see sentiment get really bearish I think for a lasting intermediate-term bottom. At 45-49, I think bullish sentiment was around 96%. I got long puts the day before the Bernank press conference, got faked out that next day on the reversal…thought he had ignited the next upleg to maybe 55-60, but then got long puts again the following Monday when it gapped down and it looked clear the move up was over.

    Sold 2/3 of my puts today. On the bullish side, it bounced nicely at the trendline, but was weak at the end of the day. Today’s close is a lower low so short-term downtrend is still down. This thing has been great for me the last several months. Went long the breakout at 31 and sold at 41. Once it looks like support is in and some type of basing action, I’m thinking option premiums will still be juicy and you can start banging out OTM puts. I don’t see a return to 50 anytime soon, but I don’t see a collapse either. At some point the gold-silver ratio will normalize back to that 45-60 range, and I don’t see the end of the PM secular bull as long as the Bernank is is control.

  8. wally says:

    FWIW, recent gyrations in commodities are perfect examples of self-organized criticality.

  9. ben22 says:

    @MikeC

    pretty good trading there, I’m not a big buyer in exogenous causality models but indeed the Fed is having influence here, perhaps I’d break down some and say major influence but that’s a convo for another day. and you are correct on sentiment, I believe at the peak in sentiment silver hit 98% bulls on trade-futures and then it moderated a bit at the price top as sentiment often does. Conversely sentiment is equally extreme of late on the negative side with the dollar. Technically though I agree with you, not much here saying crash to some far below price level, though I’m sure it feels that way for people that got long above $45.

  10. baldonkey says:

    I’m a reader that’s not an i-banker, but with an interest in the markets. I haven’t followed silver very closely prior to this current slide. Can someone reader explain to me why $35.76 is supposed to be so significant? Thanks.

    ~~~

    BR: Just one man’s line with multiple touches

  11. Minion says:

    Greetings!

    From an amateur elliotician’s point of view, the real line in the sand is the high made at the beginning of the year.

    A reversal @ 30.1 would fall within the rules for a further advance back up to 50, making wave 5.

  12. DiggidyDan says:

    Note the date corresponding to the charts. . .

    http://www.ritholtz.com/blog/2011/04/the-us-dollar-annotated/#comment-551823

    http://www.ritholtz.com/blog/2011/04/the-us-dollar-annotated/#comment-553324

    If anybody listened. . . and it helped them out. . . I am taking donations. . . for mom of course.

    I set my stops and got dropped out of DBC at 30. Hope it isn’t just a flash crash pause that realized that loss from panic before resuming a run up. (either way, i still had profits that got taken from the bifurcated reflation commodity trade i had going from the ’09 lows). I think this was the smart money rapidly cascading out and we may see a suckers rally bounce before the real carnage.

  13. contrabandista13 says:

    Silver’s had a nice shakeout, or better said, shakedown…. Either way, this appears as a correction caused by hyper exaustion after a parrabolic move…. throw away your charts and stay out of this for a while…..

    As mentioned various times, the buying of puts during a parabollic event can be quite profitable…. and, after all that is all we are interested in here…..

    Best regards,

    Econolicious

  14. baldonkey says:

    Thanks BR. The context suggested it was a specific trigger or wiped out a specific period of gains. Glad to hear I wasn’t missing anything. You understand my urge for a side order of explanation with my specificity.

  15. noahmckinnon says:

    Can someone explain to me the following action today?

    SLV: -3.11%
    AGQ (ProShares Ultra Silver – i.e. x2): 9.34%
    ZSL (Proshares Ultrashort Silver – i.e. x2 inverse) -.46%

    I don’t understand this paper shit

  16. noahmckinnon says:

    Pardon my sloppiness – AGQ: -9.34%

  17. davossherman@gmail.com says:

    Barry: You missed, THIS is the FUGLY silver chart. Everything else is noise.

    http://1.bp.blogspot.com/-ZbSjRmk5Qpg/TbBNZuTtNPI/AAAAAAAAQgs/XMfthOk87GU/s1600/silverounces.PNG

  18. fubsy_cooter says:

    Silver was a great ride, but its over for now. Fret not, the oppty to profit from the PMs will be one of the greates of the next ten years when Gold and Silver bottom, but I’d play it with the miners, as Silver will likely take a couple years to work of the parabolic top that collapsed.

    In the meantime, we are faced with another oppty to ride the sea change in market trend that has lasted for the past two years. Here’s my take on how to position oneself for a low risk entry at the beginning of the unwinding of the weak dollar trend…

    Its becoming more apparent that, there is an imminent and significant trend change underway. The reversal of this trend will change the direction of virtually every asset class. At times like this the potential for profit for those who are able to enter near the pivot is exciting. Over the past two years, a majority of asset classes have been influenced by a weakening US dollar. Currently, the dollar is trying to put in a bottom. Sentiment has reached negative extremes that mark multi-year bottoms, and the commodity complex and stocks are showing signs of topping with sentiment having become extremely positive and price volatility increasing. When the dollar puts in a bottom, the unwinding of the weak dollar trade will take several months, lasting until sentiment reaches the opposite extreme of overwhelming favoritism toward the dollar, which will likely be the point at which the dollar begins to once again roll over.

    With this trend reversal, assets that have risen for the past two years will fall..

    -Commodities (oil, precious metals, and agriculture)
    -Stock sectors (energy, real estate, financials, tech, retail)
    -The Euro

    Here is a low risk tactic for getting in on this trend early. The dollar has recently bounced at 72.69. That currently marks a potential bottom. When the dollar has its next correction, if it manages to stay above the 72.69 pivot, and reverses upward through its peak prior to correcting, positions should be bought that favor a strong dollar.

    Short commodities (oil, precious metals, and agriculture), stocks sectors (energy, real estate, financials, tech, retail) and the Euro.

    To manage risk, position size should be determined by setting a stop 1% below the 72.69 level on the dollar (71.97), and calculating how large a position can be taken such that one’s loss if the trade goes against them is within one’s risk tolerance.

    For example: With a total hypothetical account size of 100k, I might be willing to risk 2% of my account to open this trade. Thus, if I buy DUG at 32.00 (appx where it will be if the dollar breaks through its peak pivot), and set a stop at 25.00, (appx where DUG would be with the dollar at 71.95), I could open an initial position of 300 shares. 300 x 7.00 would give me a loss of 2100 or 2.1 percent of my account if the stop is hit. If the strong dollar trend continues, positions will be added when the dollar has corrections, and when it reverses higher after becoming oversold. New stops will be set below bottoming points. The reward to risk ratio is highly favorable if one waits for this setup.

    An even more compelling oppty awaits when Silver and Gold reach their bottoming points, which is why I’m only willing to risk a small percentage of my portfolio. I want to preserve capital for that time, but I believe getting into a strong dollar trend offer the potential for substantial gains in the meantime.

    Fubsy

  19. tometija says:

    Does anyone know what platform those charts are taken from? Just curious…

    ~~~

    BR: http://www.freestockcharts.com/