No Top in Silver Yet

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The silver SLV ETF continues to trade in a very strong manner.  The SLV ETF recently appears to have completed a classic Wyckoff retest on dramatically lower volume of the recent support range.  This is a very bullish sign and is not a time to think about shorting the SLV ETF in my opinion.

The recent retest of support was on 60% LESS volume and shows that the silver bears do not currently have the firing power to push this ETF down in magnitude.  The absolute worst time to short any security is on a dramatically low volume retest of a recent break out area.

I suspect we will see a further short squeeze in the days ahead that should put the SLV near the 40 range.  The silver ETF seems to be leading all markets higher.  It has gold and the stock market on a leash and may pull them higher the next couple of weeks.

Looking at the chart below one can clearly see that we recently did a retest of the important support range on 60% less volume. 

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Silver Futures Do Retest of Key Short Term Support

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Silver Futures seem to have managed a successful Wyckoff Retest of the near term and short term support range of 36.43.  Today they printed a hammer reversal and the low of the hammer was the break out level of 36.43.

In the short term I think it is important to hold 36.43, or the low of today’s hammer as validation that this was a successful retest.  Then it could allow the uptrend to resume, perhaps later this week.

In the case of the SLV silver ETF the support range comes in at 35.60.  I should say that there is a small bearish triple P pattern on the daily MACD histogram of the SLV right now.  This is still unconfirmed and would be confirmed on a close below today’s low in the SLV either tomorrow or later this week.

It still seems as though SLV is not finished with this run yet.  I still think there is upside to 40 range at some point and maybe even to 50.  Ideally tomorrow, the SLV will have an ‘up day’ and put the MACD histogram in a new potential bullish stance with possible follow on confirmation either Wednesday or later in the week.  It will be quite interesting given how many top calls there have been lately.  But sometimes top callers are right…

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Several Indices do Small Bearish Engulfing Today

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Today several indices did a small bearish engulfing candlestick formation today.  The nasdaq composite and the SPY did, but other indices including the sp500 did not. 

This small bearish engulfing needs to be confirmed tomorrow with a close under today’s low for example on the SPY to show it is a real signal.  It does not look very convincing and we may simply be at a pause in the current mini up trend.

The most potent bearish engulfing formations I have seen in the past are the ones where the bearish engulfing candle easily closes lower than the previous day by a good margin.  This does not appear to be the case today.  It may be a head fake.

So at the end of the day the sp500 is still trading within this described ‘neutral zone’ waiting to make its next move.  It is also still trading above the mini bear down trend resistance line.

sp50020110328

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Can Gold Break Out to a New Life Time High Next Week

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I just reviewed the weekly GLD gold price chart versus the MACD histogram and I think I have to come to the conclusion that there is a pretty good chance that next week is the upside weekly break out week for the GLD to new life time highs.

The nice thing about weekly charts is that they tend to smooth out all the noise.  In particular I am focusing on the point at which the weekly MACD histogram transfers from the negative to the positive (from under the zero line to above the zero line).  Every single time since early 2008, this occurrence in the GLD has led to and up week.

Now we see that the weekly MACD histogram is in a similar stance where it looks like it is just inches from transferring from under the zero line to above the zero line.  If the past is any guide, then we should see the GLD finish next week strongly higher in the form of an up weekly closes.  I cannot speak to the magnitude of the move, but it seems one can say with a reasonable degree of confidence that it should be an up move. 

Since the GLD is already so close to trading at new life time highs, I think it can be said that new life time highs should be able to be achieved as well…

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sp500 Could Surprise to the Upside Again Next Week

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The sp500 might surprise to the upside again next week and one very big part of the reason may be end of quarter and end of month window dressing.  There are four trading days left in the month next week and four trading days left in the quarter next week.  If the past is any guide, these last four days could have an upward bias to finish the week.

The sp500 on 3/25/2011 managed to bust back above the mini bear down trend line and was also able to trade a full price bar (both high and low) above this down trend line.  It was not a big sign of strength to end the week but it still managed to break above the near term down trend.

Right now I would describe the price action as being in a ‘neutral zone’ (the yellow shaded area below) that  is neither very bullish or very bearish.  It is still constrained within a zone of previous resistance.  The next most important challenge level is 1332.  There is likely to be some selling from that level assuming we can get up there next week.  If we do get to that point then I would look for selling to be contained within the yellow neutral zone to keep the most bullish chances for the market.

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Mining Stock Boom Coming Soon

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There has been a lot of ‘chatter’ lately about how the gold price may be at a major top.  I keep looking at the GLD price chart since October of 2010 and have been trying to come to a bearish conclusion but am having a hard time doing so.

It is clear that the GLD has shown a struggling attempt to make new all time highs from the period October 2010 to end of year 2010.  The pattern resembles the somewhat common ‘three drives to a top’ pattern that is occasionally seen in stocks and indices.  But this topping pattern seems to have failed.  During January 2011 we saw the GLD break down, looking like it wanted to confirm the three drives to a top pattern, but then afterwards we saw the GLD take off yet again pushing into life time highs again (into early March 2011) but only for a brief period.

My take is that this most recent push into life time highs again, even though they were only marginal new lifetime highs, should not have occurred if the GLD was in a very bearish pattern.

Instead the GLD now appears to have a cup and handle formation with 152 as the projected target (roughly 1520 gold price).

gld20110325

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Silver ETF SLV Hits Higher High on 4 Month Record Volume Today

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The SLV ETF continues to trade like a champ with 35.78 as near term support.  The SLV today pushed to a higher high on record volume, the highest in about 4 months.  This to me is a bullish sign despite the fact that it had a somewhat bearish looking reversal by end of day.  In the after hours session the SLV managed to remove most of the intra day decline today.

I have drawn in some channel support lines on the SLV chart since the August 2010 time frame and I am able to start to speculate on some early possible targets and resistance points for the SLV ETF.  The SLV ETF is roughly about one dollar less than the futures price of silver.  I drew in some channel resistance lines that look like broadening wedges on the SLV ETF and it makes the case that the SLV will run into a strong resistance zone near the 41 to 42 range.  This is interesting because it also matches close to the silver price peak that I pointed out in the silver futures in 1980.

If you look carefully at the chart below you will see how I come to the conclusion of a 41 to 42 range stopping or pausing point for the SLV.  It is a point where the current broadening wedge meets the channel line of the previous run up in the SLV from the 2010 time frame.

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Mini Bear May be Over in IWM by Tomorrow March 25 2011

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The mini bear we have seen in the market indices may be officially over by tomorrow near the open.  The IWM continues to trade right up to the recent down trend line that has defined this mini bear and is likely to bust above it tomorrow on the GDP report or even gap up above this resistance.  I pointed out in a previous post that the market would likely move into a stance where the GDP becomes the ‘decider’.  This appears to be the case now.  Also, the inverse head and shoulders on the sp500 appears to be filling out in correct formation as well.

If the GDP tomorrow is a horrible number then everything I just wrote in the previous paragraph is likely to be incorrect.  But near term momentum and even the after hours action today seems to suggest otherwise.

If the IWM and the other market indices get a break north tomorrow and then continue to drift higher into end of March, they will have once again been able to evade the potentially very bearish quarterly shooting star candlestick.

If that occurs, it would once again speak to the almost astonishing (or manipulated by easy money?) ability of the market to evade bearish signals and turn them into bullish continuation moves.

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