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Author Topic: Market Commentary - Feb 09, 2011 - Market Takes a Breather  (Read 1032 times)
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tamo42
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« on: 2011 Feb 09, 09:54:04 pm »



It was a quiet day all around in the markets today.

Let's look at today's numbers:

US Dollar ETFGold ETFSilverDow 30S&P 500
22.31-0.42%  1330.70-0.05%  30.07-0.43%  12,239.89+0.06%  1,320.88-0.28% 

It seems like the market is taking a breather after the sizable moves over the past few sessions. About the only news was that crude inventories are up. Tomorrow will feature the weekly unemployment claims numbers as well as the Treasury budget. That ought to be hilarious!

Happy trading!
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Neal McSpadden
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« Reply #1 on: 2011 Feb 09, 10:44:49 pm »

Interesting...it seems like silver flirted with the 30.07 level (fib. retracement) all day, but continued to stay above.  I will look for a retest of the 31.25 high if it holds above that level through London open; otherwise we could see it test the $29.70ish level (channel support).

This first chart shows the channel AG has been in since January 26th:


These charts show the Fibonacci retracement levels from the $31.25 high to the $26.38 low.  You can see it's just been riding along and bouncing off of that $30.07 level for the past 24 hours.  Something has to give one way or the other before too long:


You can see that silver has made a very sharp V-bottom and seems to be recovering quickly.  If silver makes new highs I would set the next price target at $36+...(31.25-26.38=4.87; 31.25+4.87=36.12)...although it needs to get up above $31.50ish to bust through the channel.
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tamo42
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« Reply #2 on: 2011 Feb 09, 11:27:09 pm »

I totally agree that silver cannot stay at this level. It has to go one way or the other. I'm leaning heavily to the rising price side because I see 2 factors: physical demand and a short squeeze. It seems that enough people have dumped paper silver in favor of the physical stuff to cause the dip seen in your second chart to reverse sharply. The v-bottom has set off a wave of short covering, which just escalates the whole situation.

I've never been a big believer in price targets based on Fib ratios or triangle sizes or anything, but we shall see how it plays out Smiley.
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Neal McSpadden
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« Reply #3 on: 2011 Feb 10, 12:15:18 am »

Yeah, I'm not holding my breath on price targets.  However, the last big V-bottom correction gave us the price target of $31, but that was a much bigger formation over a longer period of time.  I was talking with a guy last August about the future of Ag and we mapped out a $31 target on some napkins...he's an old-school chartist who's been doing this a long time.  I forgot about it completely, but I ran into him at a funeral two weekends ago and he was very anxious to talk to me as he remembered the $31 and how that came to fruition.  I frankly expect a lot of sideways action for a while, but I'll point out what I see in the charts anyhow.
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groovemachine
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« Reply #4 on: 2011 Feb 10, 01:36:28 pm »

Yep, it started moving down around London open and touched $29.69 before rebounding.
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tamo42
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« Reply #5 on: 2011 Feb 10, 01:46:07 pm »

The nature and timing of the rebounding was very interesting. I'll go into a bit more depth in tonight's commentary about it.
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Neal McSpadden
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« Reply #6 on: 2011 Feb 10, 02:59:00 pm »

tamo42,

I look forward to your next commentary.  I purely look at the charts and don't pay enough attention to news/fundamentals, so I am very curious to see how they all worked together in this instance.
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badon
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« Reply #7 on: 2011 Feb 10, 11:16:51 pm »

This is fascinating. Thanks for those charts groovemachine. Things are looking quirky right now, it will be interesting to see how things play out.
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