Market Curiosity: Exploring Markets And Systems

January 4, 2011

Silver’s 5% drop today: not a big deal, yet

Filed under: Just Watching — Tags: , , — Jeff Fitzmyers @ 10:52 am

With LBMA silver again going into backwardation after a 7 trading day reprieve (Mistake, silver lease rates went up in the near months compared to the far months.), “the worlds richest man” apparently buying, persistent rumors of silver shortages, the shorts losing control, and the US gov insolvent, many silver bulls are curious about silver’s drop today.

There was a Merriman major astro reversal date yesterday — most everything reversed including bonds. Yet the Dollar Index is only up 0.3% so far today: Weak!

According to Martin Armstrong, securities have a panic cycle (page 3), or phase transition, 2% of the time. Normally markets breath in and out: go up and down. When securities get overbought that can mean the buyers have bought as much as they want, and many start taking profits and wait for a pullback.

There are probably many BIG entities beside the bankster shorts who would love a pull back so they can buy (or cover). If they buy in a rising market, they can easily run the price up. And they try not to stunt the falling price by not buying too much.

5 months ago silver rose 60% from 18 $/oz to $29. To the people who don’t know the stellar fundamentals, that’s a pretty good rise — time to take some profits. To the people who do know the fundamentals, silver is just getting started.

Why do entities “take profits”: “How much lower will price go?? I don’t know. Let’s wait until it looks like a bottom.” How much drawdown can an account take??

Phil Erlanger: “The market tends to move against the majority at risk.” Probably in this case: weak longs. And the Asian’s are probably front running JPM’s buy orders 🙂

Xiphos Trading’s optimism: GDX back test. Xiphos Trading’s realism: NEM didn’t keep up with stocks, nor gold.

This pull back has — SO FAR — done little technical damage to the silver chart. Since the fundamentals seem pretty strong,
+ Price above trend line
– Volume is large
+ Price at rising 34 EMA

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