Projections For a Continuing Rally in Silver
Silver has been trading in very volatile fashion here in recent weeks, but notice that it is doing so within a range coming off of deeply oversold conditions on multiple time frames. At the November low, the Commitment of Traders data showed the 2nd highest net long in the smart money commercial traders position in the last year, second only to the June low. The futures market pushed below the November low on Dec 1st creating a major wide range reversal bar and a probable massive stop running point. So the smart money extreme long position at $15.00 level was breached but defended and held. Unless price breaks below that level again, I believe the action favors an upside resolution and continuing rally in silver.
This chart shows what even a "normal" bear market rally for this bear market would like in percentage terms, much less a legitimate leg up in a bull market, though there may not be much difference here. Using a futures chart and accounting for the Dec 1st low, that would push this projection out the roughly the same price range, but the time range would be early February to mid March for a high.
The historical seasonality for silver shows the strongest gains in Jan-Feb of the average year and the largest declines from August-Sept. So far that is playing out with the recent steep decline this fall. And so, there is that potential tailwind for prices as we move forward into the winter.
Given those projections, my take is that an OTM call option on SLV with Jan 30 up to March 20 expiration may be a solid speculative play from here with the $19-$20 price range as a reasonable underlying price target prior to expiration.
This chart shows what even a "normal" bear market rally for this bear market would like in percentage terms, much less a legitimate leg up in a bull market, though there may not be much difference here. Using a futures chart and accounting for the Dec 1st low, that would push this projection out the roughly the same price range, but the time range would be early February to mid March for a high.
The historical seasonality for silver shows the strongest gains in Jan-Feb of the average year and the largest declines from August-Sept. So far that is playing out with the recent steep decline this fall. And so, there is that potential tailwind for prices as we move forward into the winter.
Given those projections, my take is that an OTM call option on SLV with Jan 30 up to March 20 expiration may be a solid speculative play from here with the $19-$20 price range as a reasonable underlying price target prior to expiration.