Thursday, May 26, 2011

05.26.2011



DAILY SHORT


Day 17 of this battle between the fifty day average (resistance level) versus the fibonacci line at $33.58 (Support level). Someone commented on one my videos earlier that they wanted me to say "boring" again and I guess I have no choice and thus even though the intermediate trend is higher and bullish its going to be boring as long as its in this range to the area of $39.00. If it does break $39.00 this will cause many shorts to exit out of their trade as well as add more liquidity in buyers to the market. A break below this level will get some more people to panic and some more people to celebrate nice physical buying opportunities as the disconnect grows further. I think its likely that the breakout will be to the upside but in the binary of system of choices that means it has to be greater than a 50% chance and it probably isn't much higher to do so. Therefore, i'll label this as boring until the break and the lower volume on SLV should spark a rally soon, and if you are looking to buy on strength I would wait until the 50 day has a clear breakout.

HOURLY SHORT


Stabilizing so far above a newly rising five day moving average and below a newly declining one day average. The bolder black line is a very big level which was drawn weeks ago and fibonacci once again showing its true colours of being very accurate. At this point the market is trying to find direction as the last few weeks show major bearishness and the long term are bullish. The long term also says its normal or not a surprise for there to be more selling based on where this market is. No guarantee that the market will go lower or go sideways to the five day average, but it looks like a test is coming soon. We still need to climb above $39.00 and really into the forty dollar range to nullify the bear trends that have been haunting us over the last few weeks. As long as the $35.00 holds then I like the short term future of the market.


GOLD ANALYSIS


The trend lines shown on gold are parallel lines (equal rate of increase/decrease for each one) and connect three main points. The first one is the support level that has been touched around seven times and has not been tested since it lifted away from the 1300 area back in January. Today that level is around 1410. The middle line connects several resistance points which was last hit when gold came close to the 1600 level. The highest line that is shown connects the two times that gold got above this trend line at the start and end of 2009. I think this line is going to be important because a break above this with confirmation would really be another sign that would show the end of the currency and moves to the explosive gains many expect. If you think Gold is going to $3,000/oz or higher because the currency is collapsing or the end of the mayan calendar then there will be no choice but to have a major break above this trend line. For now, this level has been a great trend channel that has lasted for almost three years running now.

SILVER PRICED IN GOLD


If you are looking for the gold to silver ratio, then this is it (backwards) and normally when the gold to silver ratio goes up (this going lower) it means that both silver and gold are selling off and when the ratio goes lower (this going higher) then they both go up. In fact the ratio on this chart went up better than double (ratio losing more than half) and the price of both gold and silver went higher. Silver went from $18 to $47 and gaining over 150% from its value and gold gaining only around twenty percent. The bottom level I have from May 12 is only an (if this is a bottom) as tops and bottoms are well known after the fact and picking tops and bottoms is a very difficult thing to do. Those whom can consistently pick tops and bottoms are that of liars although by using fibonacci you can be profitable long term in doing so, but after silver found great support earlier this month at $39 (LOL, it did not find support) you can see why you can not be right all the time. There will come a time soon when we will need to measure not only the price of silver but many other assets in something like gold because the expiration date on the dollar is nearing.

SILVER IS MORE VOLATILE



Well this shows how much more volatile silver is over gold. How this is calculated is it takes the daily volatility of silver divide the daily volatility of gold. This is calculated by taking the (High-Low)/Low and thus how much higher was the move from its daily low. Today for example the high for silver was $38.85 and the low was $36.32 or a difference of 6.97%. Gold had a high today of $1,531.20 and a low of $1,515 for a difference of 1.07%. Dividing those two numbers gives us a difference of 6.51x more volatile than gold. Also the scaling has been changed for some major days of a larger differential because this one looked better. It makes me wonder if this increase of volatility of silver over gold is going to lead to something and am not sure what I will find when I display the last fifteen years or so which is what will be scheduled on this blog Friday evening with the gold chart, ratio and volatility differential. Stay tuned for that and have a great day.

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