To complete that phrase, "asks my how much Silver or Gold I am buying..." I literally have been asked recently by very young children when I am buying more Gold and Silver, and when I tell them I am not they ask why and grill me!!!!
I know I keep harping on this, but I am just trying to point out a market that is crying in every possible way it can be, TOPPPPPPPPP!! In the past you have always heard people say that once you saw the Wall Street Journal call for a 10k Naz, the game was over. They go on to say that is what you need to look for to pick major tops and bottoms. Well we have blown through that phase and gotten to the point that young children are even wanting to buy metals. I know "it is different this time." I know because we are all economists we know the devaluation of the dollar is inevitable, or do we?
When I look at the chart I displayed earlier in my last two posts, I see a dollar that already has been severely devalued. It is down to the point where it is incredibly oversold on the weekly charts. As we know oversold can get more oversold etc.. I think soon we will be wondering when the metals are oversold enough that they can stage a rally. Above is the daily chart of Silver and it's recent breakdown is apparent. However, notice how similar it looks to the last time it broke down, then staged a large rally. I have this marked with a red arrow. Notice how similar the momentum indicators look. However there is one major difference and it is a subtle one but very important.
The bottom panel shows a longer term momentum measurement that is beginning to roll over. It was not in this same condition during that low earlier this year. I have written sell in red on the chart to the right and a bit above the current price. If we reach that area, I think what we will see is a rollover in this momentum line combined with a short term overbought condition. These are prime selling areas when they occur which unfortunately is not that often. This is a setup taught by Larry Williams which is why I am being somewhat vague on it. It is his teaching and therefore a concept that he owns. I am not at liberty to disclose it other than to just point out it may be developing here in this and a few other markets. Basically it is a sell signal that is pretty reliable as long as short term momentum indicators support it. We will not know that until we get there, but at this point it appears they will if this pattern develops in the next few days.
I am waiting for this setup to re-enter the short side of this market, and I hope it completes in a day or two.
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