Today's metal selloff (which didn't seem to hurt SLV much) has placed the metal complex at the key point for potentially a very sudden down move from GLD 125 to GLD 121 during the next several sessions. This will fill the gap that occurred on Brexit. If we reach that mark, I expect a furious rally to ensue that takes back most of that loss and gets back to 127 before pausing and giving back half of that gain. I have removed my call portion of the SLV straddle and added GLD 127 puts yesterday. If we go down that far, I will scale into long October call positions between market prints of 121-122.8. I will also try to establish a bull put spread at 115/114.
Although SLV seemed to have relative strength today, silver stocks like CDE, ended with a bearish five day continuation pattern (falling three methods) on the candles at the low for the 5 day period. One could argue the metal did the same in a slightly distorted form. I am looking for SLV to reach 16 or 16.5 in a down draft.
Thursday is the New Moon buy day and Bernstein seasonal buys get exercised on the close of 9/2 for SLV, 9/4 & 9/6 for GLD, as well as 9/4 for USO. I also noted a WEAT buy for 8/26, 8/30, & 9/2 IF you can stomach the downward pressure in that market. The moves down on the first two dates have been significant. WEAT has spent the last four days outside the Bollinger bands, but can you really expect to rally out that deep oversold position quickly? If I take a position, it will be a small one.
I am sure all of this depends on the strength of the $USD, which looks to have resistance at both 96.5 after closing at 96 today and also at 97.6. It cleared resistance at 95.95 today. I would assume the stopping point for the dollar is where GLD will stop dropping, which will be inferred from the jobs report on Friday and these two resistance levels. After falling out of a narrow channel it started last Tues, it jumped back into its channel extension over the last couple of days and if it continues to move in this manner, it can reach 96.5 by COB Wed and 97 by COB Thurs. If so, I would expect a jump on Friday AM to 97.5 where we might see GLD take back the losses for the week.
Good hunting, but be nimble here.
Edited by thoughtpwr, 30 August 2016 - 05:00 PM.