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Ishares Silver Trust (NYSE: SLV) Takes a Beating

|Includes: iShares Silver Trust ETF (SLV)

May 4, 2011

Shares of Ishares Silver Trust (NYSE: SLV) closed at $40.58 on Tuesday, May 3, with a two day loss of 13.4 %.

It was bound to happen after almost parabolic price gains in recent weeks. In fact, even after these losses SLV remains above its 50-day moving average.

Typically corrections follow a 3 wave pattern so though the two losses are steep, there are still likely further losses ahead.

Nothing rises forever but then nothing falls forever either. There is support at $37.62, the 50% retracement level of the January to April advance. This is also about where the 50-day moving average will be met if SLV moves lower.

Bollinger Bands are also pointing to lower lows ahead, with a low near $36.00 a share potential.

Gold shares (Streettracks Gold Shares – GLD) and bullion remain well near their highs. This appears to be a move limited to silver. does not currently have a position in Ishares Silver Trust.