Thursday, May 29, 2014

Word of the Day: "Apathy"

   The movement in SLV (for me at least) is much terrifying that GLD. With GLD we have a series of well demarcated channels and lower resistance lines. GLD's movement hasn't been as dramatic as SLV's over the years. Early wild oscillations, particularly from the low in 2008 to it's high in the first half of 2011, means channel lines have to be moved further out. Furthermore, rapid accelerations in price breaks more traditional upward channels distorting prices future projections are made on (reference here is made mid-2010 to first half 2011). Where SLV is headed is difficult to say but one thing we can all agree on is 'down.'
   Easily one of the most irritating patterns in charting is a near-horizontal signal line on the MACD that often arises after a sharp ascent or descent. To compensate for the sudden change in momentum movement in these patterns is best described as "midling." I hate it and that's sort of where we find ourselves now with silver. Momentum tried to carry SLV prices up from July of last year to now but our declining channel (shown in weekly format) appears to continue with SLV having run out of steam.

   A very bearish indicator, Price Performance Oscillator (PPO), crossed the zero threshold around October of last year meaning exponential moving average of the last 150 weeks is greater than the last 100.
   SLV currently sits comfortably in the middle of the channel. The price I expect it to decline to around is $16.00 which is frightenly low considering it was almost three times greater than that three years ago. Looking at the channel I've drawn coupled with the peaks put in place back in 2008 and 2010, a bullish scenario would emerge if SLV hit $16.00 and then began slowly moving up towards the upper resistance bands. Alternatively, it could continue its slide into the $14.00 to $15.00 range (as you can see I'm having problems deciding where exactly) and then move up.
   I'm in favor of the former scenario. People seem genuinely enthusiastic about silver so sliding along $16.00 for some time before a break out seems reasonable. The caveat to this of course is that serious upward movement in SLV won't be seen until the first half of 2015.