December 7, 2010
Shares of the ETF Ishares Silver Trust (NYSE: SLV) have broken out above the highest resistance level we have in our charts.
On Monday, December 7, SLV closed above $28.46. This was the highest resistance level we track based on years of previous data.
This forecasts higher highs. Breakouts are always bullish. But the chart of SLV since early September is not just higher, it is parabolically higher. The rally cannot be sustained.
When any chart moves up in such a steep fashion, it rings warning bells. This is likely the blow off, when everyone is jumping on board, before the inevitable decline.
Could SLV continue higher? Of course it can. But chasing it up could be a recipe for disaster. Eventually SLV will correct and the correction will be fast and steep.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy does not currently hold a position in the Ishares Silver Trust.