Silver has proven its resilience in turbulent times. Tunisia revolution, Egypt revolution, Libya Civil War, Japan Tsunami and damaged Nuclear power plants, Yemen riots, as well as Bahrain riots with Saudi intervention; just to name a few events.
Historical moment has been reached. The USD is no longer a safe haven currency (represented with UUP a 2x bull ETF). Up until now the any time there was any similar event (above) everyone would liquidated assets into USD and wait until the dust clears. Not anymore, other assets mainly commodities have continued their climb higher.
The USD weakness could result in much lower price by Fall.
Well the breaks came this past few weeks. So based on technical I have determined I will take a short position in the index within the next few days. Targets are listed below with the respective indicator.
Volume: Source - SPY: The bears are out hard. Watch for volume to provide proof that the price move has strength in it. If there is another low volume float, start thinking of joining the bear side for the next leg down.
MACD: Momentum is now technically bearish, as the MACD line is below the 0 level. However, it has started to move back towards the 0 level. If the MACD line can't get above the 0 level it will be a strong sell signal. However, a strong bullish move will allow the bulls to reclaim this indicator.
Slow Stochastic: This is going to be my key indicator for sell signal. Ideally I will short when there is an overbought condition. This will provide additional bearish momentum to the index.
ADX: As you can see the trend is technically bearish, and the yellow line indicates that the market is trending (>25).
So I will look for a entry into call options for SDS 2x bear S&P500 ETF over the next few days as protection for my silver long positions.
Just looking at the fib levels it is clear that we are not anywhere close to a standard correction. My expectation is that we will see a 50% retracement. However, the FED could signal more bond purchases which could result in a faster turnaround.
G-7 Intervened in the currency markets recently selling Yen to help control the currency's strong bid as the recent disasters have caused a repatriation of wealth.
The coalition has began military exercises against Libya's military installments to prepare for a No-Fly zone which is sanctioned by the UN.
A great summery of these events can be seen here: businessweek.com
Japan is threatening further G-7 Yen interventions: Wall Street Journal
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