High Volume Climax Buying: A Signal Of A Top In The Silver ETF?
Thomas Carreno: Today the iShares Silver Trust ETF (NYSE:SLV) blasted higher almost 7% in one day. The strategy of identifying extreme momentum stocks and then watching the daily RSI blast down to oversold 70 range in one day is usually an ideal long setup and today was not exception.
This may be one of the most highly probable trades in existence today. It is essentially an automatic rally and heavy short covering the day after a previous big drop that went counter to extreme upside momentum.
I think the SLV can still exceed the 47 range in the days ahead and try to push higher to new marginal new highs.
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However I want to make it clear that I do believe we are starting to get closer to a top in the SLV but are not quite there yet.
The recent MASSIVE volume in the SLV of the day before yesterday is a sign that we are reaching buying climax levels.
Having said that, I still think we can exceed the 47 high and push higher for a while. But the next risk is that a bearish divergence will be created between price and RSI.
The bottom line is that the easy money has been made in the SLV. And yes there is upside to 60 range perhaps, but between 50 and 60 is likely not for the bulls or the bears, but instead the ‘pigs’. These high volume climax buying volumes are the precursor to a top, but do not have to be THE top.
The timing for the iShares Silver ETF (NYSE:SLV) and SPDR Gold ETF (NYSE:GLD) going into a top mid June looks quite promising. I have been talking about how the market could maybe hit a turning point in mid June 2011 but we could see the precious metals align much better than the stocks in which case there could be a huge shorting opportunity developing in the metals on or near June 13, 2011.
Related ETFs: ProShares UltraShort Silver (NYSE:ZSL), Sprott Physical Silver Trust (NYSE:PSLV), ProShares Ultra Silver (NYSE:AGQ), ETFS Physical Silver Shares (NYSE:SIVR), PowerShares DB Silver (NYSE:DBS), Global X Silver Miners ETF (NYSE:SIL).
Written By Thomas Carreno From Best Online Trades
Silver Shock? When Industry and Investors consume more than all the worlds production of Silver. Silver inventories are falling, over 4 million ounces bought by investors from U.S. Treasury last month. Less than 16 month supply of Silver left on Earth?
Bad day to be in ZSL
I would argue that, if spot silver breaks through 50, there will be more highs to come; but if it doesn’t make it back up to 49.8 (which it hit early on April 25) and falls short, that could be the start to a big selling period, maybe the end of the bubble.
All this is just my conjecture, but I would say that a failure to reach that April 25 high will be a big psychological blow and the possible start of more “falling tops” to come.