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Some said we were crazy on Friday when we began “buying the blood” late in the afternoon like a bunch of crepuscular vampyres banging our fists at the front desk of the Red Cross Depository.
And maybe we were.
But there was a plan in mind, and one part of it was taking into account the massively oversold status of the metal in the near term. The other was the support levels we were beginning to hit. I thought we were ready for a bounce of some velocity.
That doesn’t mean I think this down-stroke is over. Not altogether, at least. Just like I don’t think this overall market bear cycle is over, and that we’ll get further down action there as well. What I do believe is that we’ll get that nice rebound here, and then have to be out again for the next drop when we whack near-term resistance. Note the following markup of the AGQ (double silver) weekly:
As you will note, the party should be over by $150 or so, and I’ll be out of much of that AGQ by then, if not sooner. Because the weekly is showing that while the RSI is near-term oversold, the remaining stochs are pointing to further ruination. What’s more, that long term trend line is beckoning (as per the chart above), and it’s very likely that we will see it one more time (at sub $100) before we see new highs again.
What I don’t think, however, is that we get another deflationary event like we did in 2008. Not for a while now, at least.
Of course, this is a play fraught with risk, and I will have stops in place that will respect the volatilty of the double-ETF, while also accomodating my overall risk profile. I implore you to do the same, and perhaps consider SLV as a replacement vehicle for this trade if you lean to the more risk averse.
My best to all of you this weekend.
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Hi Jake, can you clarify “new highs” ?
Also, thoughts on slw?
Could you buy and hold here and eventually ca$h in big time ?
Thanks!
Maybe it is just me but I would not use SLV instead of AGQ. AGQ is powerful stuff so just don’t buy too much AGQ in the first place. It’s like SKF vs FAZ – why use SKF? Just don’t buy too much FAZ. In these turbulent times, there is high correlation among silver gold platinum paladium miners etc. so if you are going to play a short term game, it might as well be with the most leveraged like AGQ and ZSL, no?
I’ve gone over this before. FAZ is far more volatile than SKF. It’s a retard ETF, to be sure.
AGQ dropped almost 30% IN ONE DAY last week. This is volatility on a volatile commodity… the beta’s probably 12.
Not everyone wants that kind of motion.
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Thanks Jake. Maybe too late to stock up by tom though.
There’ll likely be a pullback if there’s a hop off the open.
Volatility rules.
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With all due respect that analysis is all hopes and dreams. Why would silver bounce to your “projected rebound line”?
I laughed a little when you said oversold. This is not a market to be buying into “oversold” Have you seen NFLX recently? That things been “oversold” for several weeks and it continues to kill people on a daily basis.
I will say from my point of view, your right silver could rally back quite a bit. However, with the shit for number coming out of China I think the Macro economic background could very easily pull silver back to $20. With the number of silver bar holding nut jobs buying weakness, I think a bounce here would be to much of a fairy tail story to actually happen.
Don’t get me wrong, in the long run I love silver, I jerk to the thought of $100 silver every night. In the short run however, I’m scared shit less. I would much rather not play chicken with this train.
JUST MY 2 CENTS. BEST OF LUCK
Silver was selling all day on Friday. AGQ dropped 30%. After dropping 12% the day before.
If that’s not enough stretch for you, well… you are probably at a different stage of the game than I am.
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Seems to me what Jake is proposing is a trade-idea only with a stop for managing risk in place. As for gold, besides Jake’s input, I like this guy on stocktwits, jking1, who thinks that physcial gold eventually tests 1522 oz. level but that short term the GLD bounces. With silver, I buy the miners through SIL and Friday’s drop looked like a nice entry for me, but I didn’t even put an order in. I’m getting over this idea in my head that I will miss a big move when these PMs pull back as the market is just so shaky right now.
1522 would be about GLD 150-155 where I also think it’s headed, as posted on my blog
A gutsy move Jake. I hope you get your bounce. How much room dd you give for your stops?
Also, did you put stops under each of your 3 buys or at the bottom of all three?
10%.
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If silver is priced in USD and the USD is breaking out.Where does that tell you silver is going to go? I hate to play devils advocate, but just saying.
Gee, I never thought of that!
(eye roll)
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MARKET CRASH ON MONDAY…THIS IS THE NEWS THAT WILL START IT ALL
http://www.bloomberg.com/news/2011-09-25/king-abdullah-gives-women-in-saudi-arabia-the-right-to-vote-for-first-time.html
No, that’ll be when they let the womens drive.
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Clearly you’ve never been over there. This is to look modern to the rest of the world. Not even men really have any rights in Saudi (other than the basics like the right to chop off the hands of suspected shop-lifters, the right to kill your wife, the right to rape and kill a woman because she tempted you by showing an ankle, the right to crash your car into any foreigner in your country with no consequences, the right to privately imagine what bacon tastes like). You know, the basics. Women voting in Saudi. What are they going to vote in a new Queen to replace the King. Hahaha.
I’ll b rooting for you.
Thanks, Brofis.
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He won’t be the only one 😉
Hell, if the giants can beat the eagles (handily) in Philly without a receiving corps or a secondary, anything is possible, right?
Want to thank Mike Vick for not only going down (again) but being a big bitch about it after the game in the press room.
It’s truly a shame that that dog-murdering mofo doesn’t have the brainspan to St. Francis University for the rest of his career.
He’s headed right back up to “Most Hated in the Class” status, with a bullet, no pun intended.
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fly says this facetiously
have you not read all his “die silver/gold bugs” posts?
Lol, I got AGQ abusing my book now too.. avg price 155ish
It’s evening now here in Hawaii with the silver futures down, this old song just popped into my head. Perhaps because of your previous post, albeit a little different. Best of luck.
http://www.youtube.com/watch?v=KtBbyglq37E
Signs of the Top?
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I would also like to re-recommend the always incisive Jesse’s Cafe Americain to you all for further insight into the precious metals market.
This guy is so much more articulate than me with regard to the fiat currency wars that I bow in his presence. A crackerjack writer who really has a comprehensive long term view as well.
I am excerpting him here, in response to yet another article decrying gold as a “barberous Relic:”
Some might say that the author was merely saying in a cute way that commodity based currencies always fail, with an example being salt or Yap stones as Mr. Buiter had argued to greater effect.
And I would say that all currencies do go in and out of favor in their time, since there is an element of relativism in value that can be enforced by ruling authorities, who themselves tend to come and go, even if in their time these authorities might seem invincible, their empires intended to last for a thousand years.
But some stores of value, not based on passing utilitarian criteria or force, do tend to be resilient, and come back again and again, and retain an element of value from generation to generation. Or as some might with a more profound understanding of money might say, they maintain the confidence of their steadfastness that is a pre-requisite of sound money that is difficult to maintain by mere force of will.
As some historians of money have pointed out, the Federal Reserve was initially set up to emulate this type of external immutability of value in what later became a purely fiat currency. As men like Andrew Jackson would have predicted, they failed in exactly the same ways and for the same reasons that every other attempt at this has failed throughout history.
All systems are prone to corruption and decay, but none so much as those that rely exclusively on the goodness and wisdom of small groups of powerful men, especially when acting in secret.
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NOW THAT EVERYONE HAS GOTTEN KILLED MAYBE I’LL BUY AGQ HERE…THINK WE COULD SEE A BOUNCE TOMORROW…A LOT OF GOING NO WHERE TODAY
KEEP IN MIND IM PROBABLY WRONG..
Color me an a-hole dip buyer.
me too
I HOPE YOU GUYS ARE COVERING SHORTS…IM NOT TAKING EITHER SIDE(CURRENTLY AT LEAST)…BUT I BELIEVE THIS IS A FUCKING ELEVATOR RIDE DOWN TO THE FIRST FLOOR.AKA SUB $20 SILVER
gloating is usually a good buy indicator.
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My apologizes…I should probably stfu..
Man! I wish I would have just watched that video before spending a hundred hours reading Ayn’s tome Atlas Shrugged.
Liking the silver bounce http://i.imgur.com/AqrVT.gif
That looks very dangerous.
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Wait til you guys see tonight’s chart.
See that chart up there now? Guess where silver bounced from today?
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Not the first support line but the second was close enough
Of course that was almost another $20 drop in ADQ between the two
Actually, it bounced exactly on the trend line, which was actually below “second support.”
Like… perfectly on it. Chart tonight…
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Yes. When i saw AGQ at the trendline around $100 i pulled the trigger. Seemed worth a punt. Not huge mind you but enough to keep me interested.
Positively Newtonian.
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No disrespect, but if you think AGQ will bounce to $150 your delusional. Quit trying to pick bottoms. Start looking for RESISTANCE NOT SUPPORT.The only reason you would look for support in a bear market is to justify a losing position. You gotta start looking for resistance as we are in bear market territory with silver.
Here is what Im looking at:
http://img834.imageshack.us/img834/5876/silverexpectation.png
When people quit trying to pick bottoms in silver we will see a bounce. That hasn’t happened yet.
P.S IM STILL A LONG TERM BULL WITH SILVER..BUT SHORT TERM BEAR.
Not sure what that incredibly hard to see chart was trying to say, but silver is currently at $30.80.
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And it’s “you’re delusional.”
A-Game!
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Well, that chart was of SLV.
Anyways, thanks for that fucking useless childlike response. Way to go! You sure brought your A-game.
You post a bunch of bullshit here, like a second guessing Dutch Uncle, then you post a tiny chart that’s unexpandable, which I then call you on.
And you have the balls to pitch a fucking hissy?
Tell your story walking, asshole.
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BUT THIS IS MY E-PERSONA…
One last thing… I think your horizontal line resistance is at $38.
Converting that to the current AGQ ratio, that would be about $142 or so.
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Okay, just so we are on the same page.(I’ll talk about the AGQ)
I think resistance is at the January 2011 low.(About $116)
If AGQ can move above $116, then YES $150 would be the next resistance point. I personally don’t think AGQ moves above $116.(possibly $119 just so the market can head fuck people)
High today was almost $115. The January ’11 lows constitute all of about four days of resistance.
We are still massiveley oversold on the daily AND the weekly, with four down volume days in a row, and two+ overhead gaps to fill.
Granted we could “fill and fail” at any of them. In fact, I’m kind of expecting that, once the rubber band momentum of this Bollinger Band crash wears off.
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BTW — the BB’s at (10, 1.9) show a midpoint of $185.83…
The 200 day EMA for AGQ?
$185.14.
Odd, no?
(BB Crash trade — take trade at open day after crash, hold for 15 days or until price touches the middle BB, whichever comes first… something like a 95% positive return trade).
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Four days? Just about the entire month of November 2010 was a fight back and forth in that area. If you would like to take it a step further, I would say from about October 2010-January 2011 it was a battle in that entire area.
Anyways, I guess we will find out soon enough. I’m sure within the next couple days.
Were you able to hold on to your AGQ or were you stopped out this morning when it dropped 20 pah-cent? Nasty little beeyatch, this one.
I took the stops off, as I didn’t want to get wiped out at an opening low, which was very close to the low.
When it was above my stop at a little after ten, I just let it go. When the trendline held, I knew we were ok.
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For my brothas who are nuts about CRAAPL… This is a very important post.
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Who is that hack??
Ha.
My guess on silver is that we now have a repeat of the early May crash. In other words, we ain’t going back to $40 anytime soon. In related news, a WW2 ship has been found with many tonnes of silver worth approximately $200 mill depending on the daily price of course.
I’ve mentioned this before to a friend of mine more than once. In pre-market this morning, AGQ had laready printed a low in the 97 range when I first looked. I don’t know how many times during the course of the regular trading day I have seen a stock return to that low similar to the way AGQ did today. Sometimes I’m not so sure it’s a coincidence either, more like a telegraph of some kind, I think. Anyway, it was a nice trade jake!
I think you want to put this on the NEXT post!
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