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The iShares Silver Trust (SLV) is tied to silver prices. It peaked at $34.08, which is the 38.2% Fibonacci retracement resistance from the August 2011 highs at $46.98.
- The 50% retracement resistance is at $36.20, and a weekly close above this level will be bullish.
- There is short-term support now at $31.52, with the 38.2% Fibonacci retracement support and 20-week EMA at $30.71.
- The 50% support is at $29.68, with additional chart support at $29.28.
- The weekly OBV moved through its WMA and overcame its downtrend (line a) in August.
- The OBV is now testing its WMA, which is rising slightly.
- The daily OBV (not shown) did not confirm the recent highs, and is now below its WMA.
- There is initial resistance now at $32.80 to $33.20.
The Global X Silver Miners (SIL) was one of the third quarter's top-performing ETFs, and is made up of 35 silver mining stocks.
What it Means
- The daily chart shows a broad trading range (lines b and c) since the early September highs.
- There is support now at $23.60 to $23.90 and the uptrend (line d).
- Additional support at $23 (line c), with the 38.2% Fibonacci retracement support at $22.36.
- The now rising 200-day MA and the 50% retracement support are in the $21.30 area.
- The daily OBV completed a well-defined bottom in early September at the downtrend (line e).
- Volume was heavy on Tuesday as buyers stepped in. The OBV has just rebounded back to its flat WMA
- The weekly OBV (not shown) is holding up much better, as it is acting stronger than prices.
- There is strong resistance at $25.76, which was the recent high and also is the 61.8% Fibonacci retracement resistance from the 2011 highs at $31.34.
: The Spyder Gold Trust
) and iShares Gold Trust
) have declined for the past two weeks, and the correction could last another two to three weeks. For those not already long, as recommended in June
, a 2% to 4% further decline is needed to take prices to a good entry level.
It is still my view that gold will move to new highs in 2013, if not sooner, with likely upside targets in the $2,000 to $2,200 area.
The outlook is similar for silver, and the Global X Silver Miners (SIL) is acting better than iShares Silver Trust (SLV). Both look attractive at lower levels. Silver has next upside targets in the $40 to $42.50 area.
How to Profit: For Global X Silver Miners (SIL), go 50% long at $23.04 and 50% long at $22.48, with a stop at $20.95 (risk of approx. 7.8%).
For the iShares Silver Trust (SLV), go 50% long at $30.90 and 50% long at $30.34, with a stop at $28.32 (risk of approx. 7.5%).
For those not already long GLD or IAU, go 50% long the iShares Gold Trust (IAU) at $16.56 and 50% long at $16.34, with a stop at $15.72 (risk of approx. 7.5%).
Portfolio Update: Investors should also be 50% long the SPDR Gold Trust (GLD) at $152.42 and 50% long at $150.28. Use a stop now at $157.22. Traders should sell 25% at $178.12 or better.
Investors should be long multiple positions in the iShares Gold Trust (IAU) from $15.68 to $15.42, with a stop at $15.72.