SILVER TRADE ALERT (7:30 pm EST)
Today was a holiday in the U.S. (Martin Luther King Jr. Day), so the markets were closed. Nevertheless, the precious metals market was trading outside the U.S. as gold prices rose to a new weekly high of $1927. Silver rose too, but could not exceed its $24.52 high from Jan. 3. Thus our intermarket bearish divergence signal from last week continues this week (until that high is broken). Gold's high is now a steep crest in a strong reversal zone, and a steep drop to a sub-cycle corrective bottom could happen by the end of this week. But a not so steep and more moderate correction could also be imminent with a bottom expected anytime between now and Feb. 3.
With silver, however, a final medium-term cycle bottom is due by Jan. 28, and that should be a very steep corrective drop from either the high of Jan. 3 ($24.52) or a higher high this week or next. Unless sliver starts to close above $25, my guess is that the high is in and the corrective drop is imminent. Our target for the drop is still $20 - $22. Today seems to be a good spot to sell short for that final correction to the cycle bottom. I am going to enter a short position in silver for tomorrow's market open. (Traders could also short gold, but gold's sub-cycle correction may be more moderate and not as profitable.) Our initial stop loss for this trade would be a close above $25.
Today was a holiday in the U.S. (Martin Luther King Jr. Day), so the markets were closed. Nevertheless, the precious metals market was trading outside the U.S. as gold prices rose to a new weekly high of $1927. Silver rose too, but could not exceed its $24.52 high from Jan. 3. Thus our intermarket bearish divergence signal from last week continues this week (until that high is broken). Gold's high is now a steep crest in a strong reversal zone, and a steep drop to a sub-cycle corrective bottom could happen by the end of this week. But a not so steep and more moderate correction could also be imminent with a bottom expected anytime between now and Feb. 3.
With silver, however, a final medium-term cycle bottom is due by Jan. 28, and that should be a very steep corrective drop from either the high of Jan. 3 ($24.52) or a higher high this week or next. Unless sliver starts to close above $25, my guess is that the high is in and the corrective drop is imminent. Our target for the drop is still $20 - $22. Today seems to be a good spot to sell short for that final correction to the cycle bottom. I am going to enter a short position in silver for tomorrow's market open. (Traders could also short gold, but gold's sub-cycle correction may be more moderate and not as profitable.) Our initial stop loss for this trade would be a close above $25.
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