After there was clear profit taking on Thursday in both the gold and silver markets, today SentimenTrader issued an extremely important update on the war that is raging in the silver market.
Here is just a small portion of today’s note from SentimenTrader on the silver market: “Silver had a large negative reversal on Thursday. After rallying more than 2% intraday, it reversed to close in negative territory. With “smart money” traders holding large negative bets against the metal, silver looks vulnerable to a further decline. Prior times it suffered a large reversal when smart money traders were betting against it, it tended to follow through on the downside, but it was extremely volatile (even more than usual)…
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…As noted in a recent Report, sentiment has been rebounding and there are initial signs that it is pushing into overly optimistic territory. Speculators have been extremely long gold and silver futures and that has not been a recipe for sustained gains in the metals, especially over the past five years.
In addition, gold and (especially) silver suffered big reversals on Thursday. One-day reversal patterns are notoriously fickle, so it’s generally not a great idea to place a lot of weight on them as predictors of future performance. Weekly reversals tend to be more reliable.
…Silver can be an exceptionally volatile contract, and these results showed that – while rarer than losses, some of the gains were excellent. If we were trying to sell a market short, that’s not exactly comforting.
There are signs of a long-term trend change in the metals, as well as the mining stocks, and so far the miners have held strong even when gold has struggled a bit. That’s constructive, especially after some of the developments we looked at late last year. On a shorter-term time frame, though, we’re leery of the potential for a reversal in these markets.”
Jason Goepfert at SentimenTrader helped KWN readers around the world identify the bottom of the market in the mining shares at the end of 2015. There has been a massive rebound in the shares since the bullish reports from Jason Goepfert were published on KWN late last year.
What Jason is saying now is that so far the action seems to indicate that gold and silver have entered a new bull market but he wants to see a bit more of the trading patterns in both metals before making that definitive call. He is also cautioning that there may be some serious volatility because of the enormous commercial short positions in both the gold and silver markets, so it’s best for investors on the long side to be extremely cautious and nimble.
To try a free 14-day trial of the internationally acclaimed work that Jason Goepfert produces at SentimenTrader simply CLICK HERE.
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