The following are charts of two positions I am currently running inside 12631. Both illustrate the concept of overhead supply, one better than the other.
The first chart is Google on the daily timeframe. I am short this one, from just south of $850. THe $855 level is a well-defined one with tons of price memory dating back several months. I am playing the short for immediate success to the downside, not necessarily for the stock to climb back inside a sideways consolidation and flop around some more. So, if bulls can close above $855 today I will look to cover.
The next chart is silver, which I am also short. Here, the overhead supply we looked at yesterday for this ETF is asserting itself today. It need not mean silver will go down and make take out its summer lows. But it does speak to the idea of the metals and miners perhaps getting a bit too ahead of themselves in this snapback rally in August.
Price has memory, and discerning how strongly the market reacts to well-defined levels is a often a good signal about whether to cut or add to positions.
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