If silver spikes UP when VIX surges, then the silver market tends to peak, but if silver DROPS when VIX surges, it tends to market the BOTTOM for silver.
We have a potential bottom here using this analogue.
I'm not a 200 bar moving average aficionado, but it touched that long term level in this pullback.
You can see that there was Key Accumulation from $12.50-$13.50 in silver because there are 19-20 months at those levels, which is a SUBSTANTIAL amount of time before the launch higher to 50/ounce seen in 2011.
If we stop out just under that level, then we put the odds in our favor with a nearly $10 upside potential to the "least traded level in Silver" at $25, up from the highest traded level in silver at the $13 level.
Bình luận
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So far, it's been a great odds trade for silver on the long side:
Silver rallied to $21.11 from $14.50 (nearly $7 or a 50% rally, while only dropping to $13.5, $1 or 8%, I like how this trade has gone... nearly 6:1 upside versus downside so far.
Since peaked and now settling back recently to $17.08 low, we can take another look and try to figure out if we can press our long position here or decide to walk away from this trade. Here's what I see now: VIX spikes correspond to higher and higher levels in Silver, which alerts me that silver is accumulated and ready to rally. When Silver was in a bear market, it would fall to lower levels on each spike. That is a sign of a broken market, or a downtrend.
Great analysis Tim, keep up the good work. All the BEST :)
LastBattle
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Silver is absolutely underpriced at these levels, way below the production cost for many mining firms unless they're digging it up as a by-product of gold.
It will be good to take this opportunity to accumulate physical silver for the long term too!
IvanLabrie
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Great!
Maybe the not highest high top is a truncated 5th of some kind. (Glenn Neely's Gold count has one I think)
I posted an SLV long idea, I had an entry from 13.91 but closed in profit. Might have to find a second entry.
timwest
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I needed to label that 2001 spike as a top - since VIX spiked up during that spike up in VIX
charle5035
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Tim- today the vix is up 6% and silver is up 1%. Would you consider this as meeting the criteria listed for a top?
charle5035
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I should also note that gold seems to be finding some solid support and has a lower probability of breaking under 1270. Since gold & silver move contrary to each other in bear markets & corrections, would it be out of the question to guess that we have an increased probability of bearish action this earnings season?
timwest
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Great question! Let me review and get back to you. Or PM me if I get distracted and don't get back to you.