Wednesday Evening 24 August 2011
This has been a busy week for the silver market, and our third
article for the week. Monday's post is worth a review for we
discuss a weekly breakout as one of the more profitable buying
opportunities, and it shows where our recommended buy position
was entered. The first one was a 60 cent loss, but the last one
more than made up for it. See [Silver - An Update Of A Weekly
Chart, for a review, click on http://bit.ly/pLMj8u]
The point to make about the weekly buy of a breakout close, how
it can a very rewarding entry, is that it is a potential trade until
realized. You can see where the breakout signal occurred and the
subsequent rally that followed. It is not always a matter of blindly
buying and waiting for results. It took two trades to catch the move,
and the buy signal on the one that worked was a subtle one.
This is where knowing the context of the market and having a set
of rules for establishing a position will pay off. The daily chart shows
We always advocate letting the market declare its intent and then
follow its lead. From entry, silver proceeded to make eight straight
trading days of higher lows. All one had to do was use a trailing
stop. It was what we did, and the position was worth a net of $7+,
on an initial 60 cent risk.
"Is that all there is?" ...an old Peggy Lee song. No, the move is
not over, but we have seen some stopping action in the form of an
OKR on Tuesday, followed by more ease of downward movement
on Wednesday. The COMEX being what it is, deciding where it
wants to place the close, irrespective of where price last traded at
the close, has been placing closes much lower than the actual
closing price. We should call them settlements, instead of closes.
Wednesday's was on the very low end of the range.
Occasionally, under normal closing circumstances, extreme low
closes at the end of the range can be an exhaustion of a short-term
move, leading to a rally. We do not know and do not care, but just
advance the observation.
Unless and until the weekly chart shows a change of trend, the
breakout signal is still considered to be in play, as far as we are
concerned. What we will look for, moving forward, is for another
buy opportunity if the rules we use say another entry can be made.
We will let the market make that call, and we hope to be in a position
to follow its lead as we did on the last call..