Will Silver (SLV) Prices Keep Sliding?

Share This Article
Mike Hammer | September 10, 2019 11:07am NYSE:SLV

NYSE:SLV | News, Ratings, and Charts

From Mike Hammer: Silver’s impressive run-up came to a halt last Thursday when some good news about the US-China trade war hit the Twitterverse. (We’ve given our opinion on that already, so we’ll just move on.) You’ll remember our adage about drops hitting 3x as hard as rises – well it wasn’t true in this case. The last 3 trading days brought a drop equal to the previous 6 up trading days, so the drop was only 2x as sharp. But for those who bought in during the last few days of the run-up it probably felt 3 times as bad.  Here’s the chart for SLV, the most popular unleveraged US ETF for silver.

slv silver trust chart 2019

A few things your sleepy Gold Enthusiast would like to point out.  First, this wasn’t a straight run-up; there were a fair number of small corrections/fallbacks/consolidations along the way. None as big as the drop the last 3 days, but there nonetheless.

Second, the RSI was clearly in overbought territory for a while there. That’s not at all unusual during run-ups, but the RSI peak of 84 was a clear warning not to put any new money in. It can be very hard to know when to sell but it’s not that hard to see when a sector is clearly overbought. (For true newbies, the general rule about RSI is that anything over 70 is overbought, and over 80 is VERY overbought.)

The rising uptrend support line shows the current uptrend is still intact until around 16.50, so we’ll be watching 16.40 as the last line of defense for the current run. Your Gold Enthusiast is not a betting man, but if he was pushed for a prognostication he’d have to say he expects the uptrend line to be broken by a consolidation, not by a big drop.

Much of the run-up was probably due to silver being so ridiculously inexpensive compared to gold.  Investors suddenly noticed that and rushed in for the sale price. Of course that drove the price up; some will doubtless sell or have already sold, but some were smart and didn’t buy everything they wanted to. Those folks will come back in and buy on the dip eventually – it’s not happening yet, but that may come in a few more days. Then we’ll see where the consolidation starts.


The Gold Enthusiast

DISCLAIMER: The author has no position in any mentioned security.  The author is long the silver sector via small positions in USLV, PAAS and SVBL. He may daytrade around these positions but has no intentions of trading out of these core positions in the next 72 hours.

The iShares Silver Trust (SLV) was trading at $16.91 per share on Tuesday morning, up $0.08 (+0.48%). Year-to-date, SLV has gained 5.75%, versus a 11.58% rise in the benchmark S&P 500 index during the same period.

SLV currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #9 of 33 ETFs in the Precious Metals ETFs category.

This article is brought to you courtesy of ETFDailyNews.com.

About the Author: Mike Hammer

Mike HammerFor 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading Group.

9 "BUY THE DIP" Growth Stocks For 2020

Read Next

Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular

Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories