Silver 1 OZ 999 NY (XAG=X) Speculators Continue To Add Exposure
It’s been a tough week for investors in the metals market, with the prevailing sentiment flipping from excitement to check the morning prices following Middle East tensions to disgust almost overnight.
While silver (SLV) prices briefly challenged stiff resistance at the $18.45/oz level during overnight trading, this move has been completely erased since, with prices now lower than they were before the first hint of tensions in the Middle East. This should not be overly surprising to investors, as resistance levels do not get discounted just because of geopolitical tensions or news events.
Unfortunately, the significant rise in metals prices due to the brief fear trade has sent small speculators flooding back into silver exposure, with sentiment also pushing above the 80% bulls level. Given that we’ve now got some complacency back in the market, I continue to stand by my belief that investors should be patient before adding any additional exposure to silver or silver miners.
The good news for investors in silver as we headed into the New Year was that the long-term chart continued to improve, and that sentiment was finally back to more reasonable levels. While sentiment was nowhere near the levels where I would consider being aggressive with new buys, it had at least reset itself from the levels of unbridled enthusiasm we saw in early September.
However, the fear trade and Middle East tensions have thrown a cog in the wheel of that thesis, with small speculators piling back into silver in droves last week. In fact, small speculator exposure is now at a 1-year high, and above the levels that caused the top in silver in September. This is not ideal in the slightest, as we now have more bulls at $18.00/oz than we did near $20.00/oz. Let’s take a closer look below:
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 17.56.
The projected upper bound is: 18.47.
The projected lower bound is: 17.41.
The projected closing price is: 17.94.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 28 white candles and 21 black candles for a net of 7 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 34.7691. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 55.79. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 6 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -35. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 3 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed down -0.059 at 17.932. Volume was 8,900% above average (trending) and Bollinger Bands were 15% narrower than normal.
Open High Low Close Volume___
17.992 18.042 17.840 17.932 33,315
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 18.03 17.30 16.55
Volatility: 19 20 24
Volume: 3,332 666 167
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
PREC.M.XAG= is currently 8.4% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect very strong flows of volume into XAG= (bullish). Our trend forecasting oscillators are currently bullish on XAG= and have had this outlook for the last 19 periods.