Silver happens to be one of my favorite commodities to trade but it is not for the faint of heart. Very early in my career a very successful commodity trader told me silver takes the escalator up and the elevator down. Translation when silver cracks it can be a big move in a hurry displayed by the last week?s action. In the last 6 sessions silver has been down every day dropping roughly 11%. In $ terms this represents almost $19,000 per future contracts. Moves like this fortunes can be made and lost so make sure you know what you are doing or dealing with a professional if swimming in these waters.
My objective has been reached as I?ve been saying a trade under $30 bearish trades should be taken off and with a 61.8% Fibonacci retracement completed today that is good enough for me and my clients. If you notice I point out that we filled the gap from 8/22 mentioned in previous posts. My stance now is aggressive traders can reverse and start scaling into bullish trade. At current levels I suggest buying 1/3 of the ultimate position you want to own. Lightly start scaling into futures or call options on the upside. I will be suggesting various strategies depending on clients account size and risk tolerance. Use the Fibonacci numbers on the upside on the chart above as your target. At a minimum into early 2013 I think we can trade back near $32/ounce. The chart above is March and for options I suggest May or even July contracts depending on the strategy.