Market Curiosity: Exploring Markets And Systems

January 27, 2011

Looking for at least a bounce in SLW soon (too soon -17% calls, 0% long term calls)

Filed under: -05 to -24%, Mistakes — Tags: , , — Jeff Fitzmyers @ 8:00 am

Expecting a silver explosion someday… So the plan is to buy June calls at the strike of 35, and a few at 60.

+ Price has declined to AB = BC*1.6.
+ Near the old October high.
+ Near the 34 EMA.
+ Weekly CCI is relatively low and daily CCI has crossed over it.
+ November gap is now closed.
+ D, W, M RSI’s all over 70 have reached their respective ~targets (using the term very lightly).

After a 1 day reprieve with SIFO in backwardation out only 6 months: back to the full 12
Silver’s January backwardation out to 12 months, SIFO chart, implications
Still waiting for silver’s correction to end
Silver fundamentals suggest higher prices after correction

From: The obvious and GARGANTUAN silver opportunity
A) Above ground gold is 5 times more abundant than silver.
B) Gold costs about 46 times more than silver.
C) The disparity will balance someday.
This is a simple situation where the outcome is known, yet people are mostly oblivious to it. Once things do regain balance, people will likely look back and say, “It was so obvious, and available for so long, I can’t believe I did not buy more silver!”

Today might be the day. On the hourly chart silver seems to be backtesting a falling wedge.

Jan 26: Backtest complete. Bought a few June SLW far out of the money calls and a few June 35 calls. Will buy more if price rises above EMA’s and they start to trend up.

Jan 26: Added a few more June 35 calls.

Also a short interview mostly about silver with Eric Sprott, CEO, Sprott Asset Management.

Jan 27: The bounce was very short lived. Sold the June 35 calls, kept the far out of the money calls. I should have waited until the hourly EMA’s were moving up. Will post the percent loss later.

Jan 28: EMA’s still trending down, but price now testing resistance of 34 EMA and down trend line after quickly moving up from a new low. The calls from yesterday would be fine right now, but holding them and having price drop a lot would be a large loss. Better, for me, to exit and re enter when the EMA’s are heading up. (Like I was supposed to! But then “didn’t want to mss the moon shot!”)

Notice price has risen above the last right 3 peaks without pausing much (and on high volume.) I think Rick Ackerman suggests that means the trend has changed on this time frame (60 mins). We shall see. Expecting a back test to the 34 EMA.

Feb 4: Bought a few more June 60 calls.

Feb 10: Sold the June 60 calls (+0%) due to the SLW:Silver ratio chart looking like a move lower is possible as noted in Caution warranted if long silver or silver stocks. So far today this does not look like a good decision.

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