After a long hiatus due to professional reasons I am back... and in force I hope. I also endured a little surgery not too long ago, but this has also passed by. The reasons are not to be alarming but nonetheless I will still have to undergo surgery one more time in a couple months but then all is set.
There is so much to talk about that I don't even know where to start. The markets in terms of the stock markets have been pretty much range bound since the last time I posted. But in the commodities arena... my oh my... there are some beauties out there... but also don't forget that beauties can turn into ugly monsters in a matter of an instant at times.
One of those beauties is SILVER.
Silver has exploded up high for the past few weeks, and lucky me I was on board for most part of when the breakout took place. But it bothers me... the pace of the rise has been pretty much parabolic and sentiment among traders in silver is sky high at 98% !! This means only 2% believe silver will go down in the future...
You, as long time readers of myBullmarket, know that when the majority is on the wagon it's usually when this one derails off course.
Silver looks to be such case... in a blow off top manner, these type of movements end in only one way, the spectacular rise gives turn to a spectacular downfall as well...
I know I know... "Oh but the FED is printing billions after billions... silver will go through the roof with so much printing". While the FED may be printing like there's no tomorrow, I'm a firm believer that markets ultimately will go wherever they want to, with FED or no FED... remember last year when everyone was advocating the downfall of the Dollar for the same reasons? "Hyperinflation this, hyperinflation that...." What happened? The dollar rallied from 74 up 'til 89 in the subsequent months, and here at myBullmarket we anticipated that move.
6 months later and with EURUSD in the crapper myBullmarket made use of the "Magazine Cover" curse, when magazine The Economist had in their cover the enterings of Leninegrad making allusion of the downfall of the Euro, and we anticipated a move upwards in the Euro for a few months. It has been 4-5 months since then, and with the Euro now at 1.40's I think we have the same type of contrarian signal once again...
The Euro looks poised to start a decline for the weeks to come and silver in my opinion... well a picture is worth a 1000 words they say...
See how the move looks parabolic? Like I said these type of moves that are spectacular in a way turn out to reverse and do it so in a spectacular fashion as well...
In the graph above we have silves again ... we may have some more room to the upside... there is strong resistance at the top of the channel around 30 USD per ounce and that may well be the point where silver reverses and starts a meaningful or a very nasty decline. Also 30 USD is also the target from the inverted H&S formation that went from 2008-2010, so we have 2 points of confluence in resistance...
Therefore I'm starting to be itchy with my position in silver and will start to scale down along the way up but always leaving a few so if a stronger trend happens to take place I will take advantage of it... but I doubt it. Although trends usually do go way beyond of what most people anticipate...
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Disclaimer: The author holds long positions in Silver and long positions in EURUSD. The author does not take responsibility from the actions taken by others. The opinions listed on this article are of the author only, and shall not be deemed as financial advice, or any other sort of advice. All visitors to the blog should do their own research before making any decisions. This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses any one might sustain from the content provided. Author is not a registered financial advisor. Author does not engage in dispensing financial advice.
