After reviewing recent Commitment of Trader's ( ) report data (week 10 of part 2 in our school for trader development....ya, our program is huge!) a student and I stumbled upon a startling fact. Within many reports (from the Comex to the LME ) we noticed two consistent facts. 1. Large institutions are heavily net long metals. From Gold to Copper to Nickle, smart money is long. and 2. Industry (measured through 'Producer/Merchant' activity) is heavily hedged against a price rise. Each alone isn't enough to draw conclusions, but usually when we see this kind of relationship together, it can be explosive.
Here then is the current weekly comex silver chart. I personally find it very interesting how price is currently trying desperately to reclaim the 78.6 Fib or the bottom of our Optimal Trade Entry (long) zone - often denoted with OTE . Specifically, I refer to this level as the 'line in the sand' as it represents a level where if the bulls where going to put up a last ditched attempt to keep the market , it often occurs here. So with all that said, here we have a nice little trying to form right at that level. Considering both industry's posturing and institutional expectations (they wouldn't be net long if they didn't think there was money to be made being long) I am more then happy seriously considering getting in on the long side of this market. . I like waiting for the market to confirm the bottom through a concept called market structure which will occur on a move through $18.505. If and when that event occurs, I will want to be a buyer, the question is how to do so. One could buy that breakout and play our Hollywood Nik setup (detailed on the trade notation on the chart) or hunt for OTEs along the rally's path to get in - that's really up to you as a trader and what kind of setups work best for you (again, another huge reason our students love our programs is we find which kind of setups work best for them!). For those really adventurous, consider an out-of-the-money call option around that 50% target level and watch your percentage returns go through the roof!
The point of this post is to bring to the group's collective attention the fact that big players are taking serious positions around a market that really isn't in favor at the moment. Additionally, we could very easily put in market structure (W) at a very appropriate trade location.
Put it all together and it spells opportunityisnowhere - its just all a question of your perspective. Use the information as your can and all the best.
aka The Rational Investor