SHORT ATTEMPT NUMBER TWO
Here is the makings of short attempt number two for me in the metals. I know we had some dialogue about the supposed bullish readings in the COT report last week. You can clearly see on the chart why I said there was some buying but nothing significant. How in the world someone could look at this and ignore all the massive selling that has gone on during the whole rally, then cite one major little wiggle up and claim that was record buying. I am not trying to pick on anyone, but what I am trying to do is show people why having a bias can blind you to what is really going on. Even if you are a perma bull, wait for more than this, to say this is insignificant I think over states what it is. The trend is very clear as to what is going on in terms of the commercials here in the Silver market.
My short term indicators are close to rolling over here and they will on any down move that starts now. It is time for me to take another shot at this, and I do have orders in. I am hoping tomorrow closes up because that sets up my patterns better, but we don't always get things perfectly lined up.
We do seem to be set up on the short side in many places right now, and what is probably stopping them from really rolling down is the ever upward stock rally. It may well be that it makes the trades not trigger or if they do, not work too well. However, that is conjecture, and I have to follow my rules of trading. My opinions always lead me astray so I really try to store them where I can't find them like a drug addict trying to kick a habit. In general I think Gold is tad weaker than Silver, but my short term indicators are better sells in Silver at the moment. It is basically the same trade so I doubt it matters which one I trade.
I do like the fact that the last big pivot before the rally has been taken out, this tells me there is a trend change at hand. If we were to start making more higher lows after one another that could turn the trend back up, but that has not happened yet. For now the trend is down, the COT stuff is bearish, my short term indicators are bearish. That tells me to short this. I may get smoked, but I will follow the rules.
The overall market just keeps plugging along nicely. I do admit I was looking at sell signals potentially but those setups barring a trap reversal play if tomorrow closes above the old highs then reverses the next day, are off the board. My tools I admit do not work well when you have a market that just runs one way this long without any corrections. I am not sure if any tools do, other than the basic moving average crossover method. Of course that method only works in this type of environment which is the problem with it.
The big difference in my mind between this and Gold and Silver is the trend. Here we have a huge up trend, so although the small specs being this long is a problem, commercial selling against long term trends like this is not necessarily a sell signal for me. It is best to look for selling in a rally in a down trend as opposed to them just hedging rallies like this. There is an art to reading this report as I have said many times. As bad as this looks, to me it is not a raging sell signal other than I am concerned about how long the small specs are. This is never a good thing for a rally. Picking a top here is a fools game in my opinion. It does appear our Euro predictor chart needs a life line here to be correct. It's perfect game might be broken here unless we turn right here.
It is my bet that most of the sells I am trying to get into are not going to trigger unless the stock market has some type of setback, but I will place the orders and see what happens. I wish I had more buy signals, but they are just not here.