Sunday Evening 1 May 2011
About a half hour after our silver article was posted, the market
opened with a rather stunning decline of over $5. This bolsters
what the article observed. [See Silver - Be Long, But Not A New
Buyer Up Here, click on http://bit.ly/lAV6EG, four hours ago]. We
pointed out the location of the closes in conjunction with the
associated heavy volume, an indication of sellers present.
What these observations say is the capturing the essence of
developing market activity is the BEST source for market news.
It encapsulates ALL of the collective minds trading in the silver
market, registering the results of all trade decisions made. It
then becomes a function of reading the factual observations,
as was done. Not all "reads" are as clear, nor do they
necessarily translate into immediate results. However, when
followed, they usually lead to the logical conclusion, unless
changed by newly developed market activity.
What to make of this dramatic price change? It will like lead to
a consolidation trading range, and that will be healthy for the
continuation of this clearly established strong up trend. This is
an example of why one does not "chase" any market, up or down.
The "read," as our observation in the last post, above, suggested,
there would likely be a correction, As is also often said, the outcome
of how any market will develop is always an unknown.
That the outcome of any trade cannot not be known was
underscored twice in a recent previous article, Silver And The S & P
- A Tale Of Two Markets, click on http://bit.ly/lEsnLH, 5th paragraph,
and again, the fourth paragraph after the second chart. It is always
important to know certain axioms and give them heed. One more
comment we also like to make, as a guide to stay out of trouble is
to stay one step behind the market. Let the market lead; do not try
and get ahead of it or try and outguess it. That is why brokerage
companies have margin departments, for those who cannot resist
the siren call of "prediction" instead of factual observation.
Let the proverbial "dust settle," as it always does, and do not be
heroic by jumping into the fray. There will be clearer opportunities
that will develop. It is the nature of market behavior.