Commercial is the most short silver since october 2009 and at levels similar to silver´s 2008 highs. The COT INDEX is giving a strong sell signal for silver. When commercial is selling heavily, large and retail are buying heavily. Commercial is currently at 0, large is at 98.92, with retail at 100 When Commercial is selling with large and retail buying, silver 2011- to date has sold off.
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More charts in the comment section. If silver rallies and gold continues to sell off. IMHO a huge bull trap could be setting up. I could be 100% wrong like I was with the last silver call. So a stop is a must have.
Not very popular view at this time but would like this a lot. Majorities are always wrong but when bull will reassert itself bears will be wrong. COT is still looking ugly. We'll see how Friday's one look.
60% correction is out of question but 24% could happen. At this moment don't look even possible.
elp
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The COT index measures buying and selling pressure. The Cot Index for silver and gold is giving a sell signal once again last friday. Commercial at 0 = commercial is selling with large and specs at 100 = large and retail are quite long. This setup has been quite reliable the last few years. Go see for yourself at timingcharts dot com Also FXCM has a sentiment index. When the majority of their retail traders are long it´s usually a bearish signal. Currenty the majority of FXCM retail traders are long. As a small retail trader there is no way I can move the markets. All I can do is try to identify the players who do move the markets and follow their lead, jump on their train for a free ride if it works out.
Silver going back to year 2004 has found a low in january and staged a rally that can last into may. However, march and april have been topping months for silver. Since 2011 highs, if silver closes green for the month, this would be the longest month rally in 5 years.
I would not be selling silver at current prices. Yet if silver traded back up to the top trendline, the RR setup with a tight stop is good imho, if COT is still piling on the shorts.
On gold, looking at the weekly chart. Using the CCI setting 20, Gold is at an extreme where it has topped out for the year 2011 thru 2015 with a minimum of a 10% correction. Maybe this time it does not workout where its different. I do not know. However the rr if price makes it back up to highs on silver is good for a short looking at seasonality.
Ranngo
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Thank you for great analysis. I am expecting pull back based on COT commercial position alone but this helps. Thank you. Feel free to update later on if you wish. :)
elp
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Martin Armstrong pointed out in his blog about the time when silver rallied and gold sold off. if this setup trades again a huge bull trap could be setting up for the silver bulls. Here is the chart
Commercial is piling on the shorts for gold where March highs were not broken.
elp
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Well my timing was way off on this one! Although I still think metals could go down. More so gold since it never broke out like silver did. FWIW commercial is the most short silver in 11 years. If for some reason silver continues to rally and gold tends to go sideways or sell off,IMO silver could be setting up a huge bull trap.
DownUnder
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so we can expect a rapid recovery ? or RIP silver :-)
elp
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would think we could retest the december lows, break dec lows and believe silver would try to test the bottom of the channel. Silver experience a huge rally from yr 1993 lows to 2011 highs. Price might need more time before building a base to retest 1980 & 2011 highs or break them. Time is just as important as price. here is a silver chart for the 1970´s rally and the following rest period. Timewise silver made a bottom at 2.618 in time of the previous rally.
60% correction is out of question but 24% could happen. At this moment don't look even possible.