Hi, ho Silver: Away!

silver

 

Younger readers will have no clue to what the title of this blog means, but they can use the internet to look those words up.

Anyhow–According to Thackray’s Investors Guide, as well as Equityclock.com, silver can have strong positive seasonal tendencies in September. I’ve posted charts above of silver bullion, and below of the stock Silver Wheaton (SLW) -an equity that is highly dependant on silver`s fate. An interesting trade appears on both charts for silver and its related equities.  There may be some significant upside potential for shorter termed traders on this metal every summer. It would appear that silver (and equities related to silver such as SLW) tends to form a summer trough around late June or July. This has certainly been the tendency since the beginning of the recent bull market in 2009. Within a very short period of time after a July trough low, silver and SLW have rallied to form significantly higher peaks by September or October. I’ve marked on the chart the summer buy arrows (bottom of chart pointing up) and autumn sell arrows (down arrows) for those years.

slw

If you have a short termed trading side to you, this might be a nice one to consider in a couple of months. Silver is already setting up for a summer low. Watch for a trough and bounce for an entry signal in late June or July.

Keith on BNN television’s MarketCall Tonight: Next Tuesday May 27th, 2014. Phone in with your questions on technical analysis of your favorite stocks for Keith during the show. CALL TOLL-FREE 1-855-326-6266. Or email your questions ahead of time (specify they are for Keith) [email protected]

 

4 Comments

  • I’m just curious, are you still 25%+ in cash? In this “never-ending” market, it’s hard to keep the faith but I too am heavy cash, just watching it loaf around earning nothing.

    BTW, great blog on …”I’ve got gas”. How long did it take you to think all those puns? I’ve been trying to work up of a retort but can’t come with anything worthy of your effort so I won’t even try.

    Reply
    • Hi Fred–yes, I’m still 27% cash
      Two reasons: seasonality is a discipline that, if followed, works out over time. Its really a statistical thing, playing the odds – it may or may not work this year, but that is not something you know ahead of time. Nothing works with complete certainty, but I will trade with the odds of the seasonal statistics.
      Also–beyond the sentiment work I have quoted, what bothers me more than anything is the VIX chart, which I posted a while ago– some work I read on sentimentrader yesterday suggests that with VIX levels where they are, there is almost 100% certainty of a spike in volatility in the next 30 days, and even several months out.
      At the end of the day, you have to do what is most comfortable to you. I do the seasonal trade every year. It saved my bacon in 2008. It worked very well in 2011. Missing big losses those years make up for the strong summers of 2012-13.

      Reply
  • Thank you for the possible Silver trade. What is nice about this trade is that it’s in a nice triangle formation. So investors have an opportunity to set a tight stop at around 18 dollars should the trade not work and the triangle break down. Possible upside could be 25 dollars or more which is a nice risk/reward proposition.

    Reply
    • Agreed Dave
      It does look like a right-angled triangle is trying to form itself. And the support at just over $18 is there as you note, so it will be interesting to see if it can hold, and if the triangle breaks. Either way, the seasonal pattern seems to dictate some type of move up after July.

      Reply

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