There is no question in my mind that we are on the cusp of a very bullish move in silver. But, that is not the same thing as having a confirmed bottom in place.
As I did my weekly perusal of the authors on Seeking Alpha, which are traditionally very bullish metals, I saw a very wide view of the metals. Many are suggesting to remain short, while others are suggesting silver is ready to go parabolic. Yet, all seem to give "reasons" for why they believe as they do. And, the funny thing is that the same "reason" causes some to be bullish and others to be bearish. However, I do not look for "reasons," as I only believe that silver is moved by sentiment. So, it leads me to take a Goldilocks perspective at this time, as I think both sides are getting set up for whipsaw and a shake out.
Everyone in our trading room got all excited on Friday morning when they saw the jump in silver. But, as I had explained just the day before, we should not be surprised to see that type of move up in the metals, which could very well still set up the final decline before we see a larger rally in silver.
But, those that are attempting to short silver on this jump, I want you to know that any drop that we may yet see in the upcoming week will likely be retraced quite quickly in a very strong snap back rally. As we have seen from the latest COT reports and market sentiment indicators, general sentiment in silver is still exceptionally bearish among all market participants other than the commercial group. And, as I have said before, when the boat is heavily weighted on one side, it will not likely be a pretty picture for those on the crowded side of that trade once we complete the immediate pattern on the downside. So, shorting silver here is quite dangerous, and the upside is probably the safer play relative to the downside for those looking at time frames beyond the next few weeks.
As for my immediate expectations, nothing much has really changed from last week:
Based upon my sentiment analysis using Fibonacci mathematics and Elliott Wave, as long as silver remains below the 23.05 resistance level that I cited weeks ago (which actually held to the penny two weeks ago), then I am going to expect to see a 19/20 handle on silver before we see a larger recovery rally up over the 25 region. But, that rally will likely also be sold for one more low later this summer or early fall. Yet, I will maintain an open mind that the next low we see may be the final low before a very strong rally in the metal. Only time and wave analysis will tell. But, I will be adding to my net long long-term long position on this drop and treating it as if it were the bottom, and still leaving some "dry-powder" available for another low later this summer or fall, or for a confirmed break out, whichever comes first.
Disclosure: I am long SLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I have intermediate term puts as a hedge which will stop out if silver takes out resistance, or if we hit our lower targets.