Wednesday, April 27, 2011

Wednesday Commodity Round-Up

Silver has been getting a ton of attention lately, largely because traders and investors are seeing it as an alternative to gold. So, let's break the SLV ETF's chart down to see what they say.

The underlying technicals are extremely bullish. The A/D line is showing a ton of money moving into the market, which is confirmed by the CMF. In addition, the MACD is also showing extremely strong momentum. The EMAs are currently in the most bullish orientation possible, with the shorter above the longer and all moving higher. Also of importance is the candles are using the EMAs for technical support -- yet another bullish development on the chart.

The six month chart shows the recent bullish action in more detail. Also note the volume spike over the last week or so, indicating we may be witnessing a buy climax.

The above chart is a four year, weekly chart which I included to show two things. First, notice the volume increase over the period adding credence to the argument we're seeing a buying climax. In addition, prices are parabolic, which simply can't last.

I think the last chart says it all; prices are in a position which can't last under any conditions. I think this rally is pretty close to correcting.