Wednesday, May 11, 2011

Dead Cat Bounce

This chart was created post close on Tuesday and originally appeared in the Chart Lab section of the site.

 I believe the dead cat bounce has almost run its course with silver. I have been progressively sliding my expectations for the retracement in the white metal lower based on the tepid money flows, proximity to the 50 day moving average and the various trend and momentum metrics starting to roll over. After yesterday's unlively action, you can see that the 50 day moving average is starting to diverge from the 2008 analog. At this point, I have a target of ~ 38.50 for SLV and will likely start building a short position through ZSL later this afternoon. I think there is a respectable chance that SLV will open lower this morning and firm up and rally towards the close.