Wednesday, January 19, 2011
SLV 60 min. chart
But in practice, it is actually a mechanical thing. When I see the gold-silver ratio make what looks like a massive H&S bottom on a weekly chart, I sit and stare at it for weeks on end, respecting its bearish possibilities as long as it is intact. It breaks down? I drop risk management and let portfolios run. This is what happened last summer.
Now? There is a much more nascent bearish sign in the GSR and I respect it as well. Believe me, you do not want the TA guy going free style and seeing what he wants to see. So I have some silver shorts against a healthy bunch of gold and silver stocks (just added to Fortuna Silver position last week and added MFN per the smart analyst at IKN's reco). In short, I know that when I am making money in my PM positions, silver is usually out front, leading.
As to the chart, just doing a little micro management of a potential topping pattern that could bring on a healthy decline to one or both of the noted gaps. If you are not a day trader or momentum trader, why would you care about a healthy pull back? As yet, SLV has not triggered anything bearish and if it gets through this little test and goes bullish again, I will just get out of the way. Why make things more complicated than that? I added some gold positions in last week's smash, added back a former core member that got clobbered on financing yesterday and each day look to add to a growing list of quality holdings. Having silver bear hedges in place helps me add potentially epic longer term trades as I see them become available.
In short, there's more to market management than black and white, bullish and bearish. There are time frames, contexts and game plans. http://www.biiwii.blogspot.com