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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • Silver - Keep Buying The Physical. Courage And Focus Required 1 comment
    Jun 2, 2011 12:51 AM

    Wednesday Evening  1 June 2011

     The sharp decline in silver on Wednesday, while gold rallied, did
    not come as a total surprise.  The extent of the decline did.  Keeping
    in line with the previous article dealing with context, we start with the
    weekly chart.  The two horizontal lines are drawn from the last swing
    high, bottom line, and the last swing low, smaller top line, with the
    word "spacing" to the right.  We have mentioned this concept a few
    times, and in the last article on silver, [See Silver - Context:
    Accumulation Likely Underway
    , click on http://bit.ly/lcrMKG first
    paragraph after first chart].  It is an indication of overall market
    strength, and it says the trend is stronger than a normal uptrend,
    one without spacing.

     A valid question to ask is, what happened to the sellers AFTER the
    large decline at the beginning of May?  What followed were
    consecutively smaller range bars and, to the point, a clustering of
    closes.  We often mention a clustering of closes as an indication
    of market balance between the forces of buyers and sellers. It is
    a sign of a resting spell prior to the preceding market direction
    continuing, in this case, lower, or it can also mark a turning point,
    as it appears to be doing, for a rally did ensue starting last week.

     The small range bar tells a story in itself.  The reason why that
    range was so small, third bar from the end, is because sellers were
    either absent or unable to extend price lower.  The position of the
    close, on the upper end of the range and just a touch higher than
    the previous day, says that buyers were in control at an area where
    sellers should have buyers on a rout.

     We also discussed the fact that there was a likely transfer of risk
    going on, from weak-handed sellers to strong-handed buyers. 
    [See  5th and 9th paragraph from the article link above].  The
    weekly chart, which we did not cover in the previous article, tells
    us that the trend is not only up, but up in a strong manner,
    evidenced by the spacing.  It could be that price may decline and
    eliminate that spacing, but that has not happened, so we deal with
    the facts before us in the present.

     SIN W 1 Jun 11

     It was apparent from the daily chart from the two wide range bars
    down, the second week of May, that the recovery rally was more
    labored, 12 days, up to the small range bars, third bar from the end. 
    Herewe see the opposite of a small range bar neat the high of a
    rally.  It tells us that buyers were absent and unable to extend the
    rally higher.  That led to the Wednesday sell-off low of 36.35.

     For price to move higher, above the last failed rally high at the 
    39.50 area, buyers need to be able to absorb the sellers, and then
    move higher.

     SIN D 1 Jun 11

     There was also discussion of how markets are constantly testing
    and retesting support/resistance areas, probing to see what supply
    or demand may still exist.  [Click on http://bit.ly/lcrMKG, second
    paragraph, and numerous mentions throughout the article].  We
    picked support as starting at the 36.50 area, and we emphasize
    area rather than a specific price for the market may undershoot
    or overshoot a single price. [See last paragraph after third chart
    of linked article].

     You can see how price on Wednesday retested the low, and new
    support from 26 May.  Will it hold?  No one knows, but given the
    overall trend, this is a buy area.  It is too difficult to be specific for
    futures traders, given the large price fluctuations and very high
    margins, but it is like a fire sale for those buying physical silver
    they can hold themselves, bars of any affordable price range for
    an individual, and 1 oz Eagles.

     For physical silver to hold, it is Buy! Buy! Buy!, for there is no
    concern for margin problems, and we are of the belief that silver
    will ultimately surpass $50 easily, and at least triple that amount. 
    Holding silver is a far superior way to grow one's wealth,as opposed
    to holding any form of fiat, especially that issued from the Federal
    Reserve.  Always remember, it is not that the price of silver, or gold,
    is going up, for an ounce is still the same ounce.  Instead, the
    purchasing power of fiat keeps going down, and it takes more and
    more fiat to buy that same ounce of silver or gold.

     Hold physical silver and gold, and we believe silver will continue to
    outperform gold, as it has been in this bull market.

    SIN 60m 1 Jun 11

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  • ttn08
    , contributor
    Comments (14) | Send Message
     
    i will buy more physical silver
    2 Jun 2011, 03:20 AM Reply Like
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