Jeffrey Hirsch - Stock Trader's Almanac
02/22/2017 9:26 am EST
Over the years silver has peaked in February, most notably so in 1980 when the Hunt Brothers’ plot to corner the silver market was foiled. Our seasonal analysis shows that going short on or about February 17 and holding until about April 25 has worked 33 times in the last 44 years for a win probability of 75.0%.
This year, typical seasonal weakness has yet to materialize, but silver is nearing resistance around $18 per ounce. Silver has also posted a weekly gain for seven straight weeks and appears overbought.
ProShares UltraShort Silver (ZSL) is an inverse (bearish) ETF that seeks to return two times the inverse of the daily performance of silver bullion priced in U.S. dollars for delivery in London and is the choice to trade this seasonality in the Almanac Investor ETF Portfolio.
Average daily trading volume can be light, but when silver declines in earnest, trading activity in ZSL does expand quickly. ZSL can be considered on dips below $30 or when silver trades above $18 per ounce. If purchased, employ a stop loss of $27.50.