Coming into today I was hoping to see another explosion in my favorite stocks – the PM miners and the underlying metals. I had exposure through SLV march 30 calls, SLW march 35/36 calls all picked up early last week. The morning gap down was the first warning sign, even though the futures sold off slightly last night. You can see here that we gapped down below the supporting trend line for the rest of the week. The second warning sign was the inability of silver (I’m going to use the chart of SLV as an example) to regain its 20 period MA on the 30 minute timeframe (another indicator thanks to @ChessNWine – a must follow IMO) or breach its downward trend line. While these warnings do not mean a breakdown must happen, you should always trade what you see not what you think will happen.
I raised my stops significantly. Once I saw $SLV test its support at 32.20 several times and never really make it back above the 32.50 area I sold out of my SLW 35/36’s. Shortly after I was stopped out of my SLV 30’s.
Below are the charts I was watching throughout the day:
The most important part of the day for me was that I respected my stops, and by doing so was able to lock in some profits. As it stands I believe the uptrend in silver and gold is still intact but we are seeing a correction within the uptrend. If I am wrong and we gap up tomorrow I will look to add on a subsequent dip. However, we could see a pullback to the initial breakout area – either way, I will be watching tomorrow and looking for good entry points. It is important to note: there is backwardation in the silver futures again, suggesting the physical stuff is in short supply. I have been reading that a large player was pushing the futures around today in the PM given the low volume: ( http://traderdannorcini.blogspot.com/2011/02/silver-dropping-sharply-in-low-volume.html?showComment=1298581394294#c1800346230088757585 )
Other than the PM’s, I basically managed to time stopping out right at the bottom in ATPG and am still holding my BG calls. I will add on weakness tomorrow, and am content to let them ride. I view the declines in the softs as the ‘hot money’ rotating elsewhere and being hurt by margin calls. Don’t kid yourselves, food is in short supply, so get a piece of the pie while you can.
NGD pulled back today after trying to break out in the morning, but is still consolidating within it’s channel.
I will do some more digging on where the PM’s could go tonight, and will be watching the futures for any clues. I will follow up on this post once I have some more information.