October 17, 2017
By Mish Schneider
To date, I am not nearly as loaded up on commodity trades as I plan to be once certain technical factors line up.
With all the current buzz about inflation and the rising producer price index, preparedness for buying languishing commodities makes sense.
Currently, the Federal Reserve’s inflation target falls short of the parameters they would like to see before raising rates further.
Interestingly though, just about everything can change on a dime.
For example, who will lead the Fed come February, is one change we expect to occur.
The historically low ratio (has only been this low twice in the last 100 years) between commodities and equities could also quickly change.
Silver is fun to trade when it gets going.
It’s the metal I cut my teeth on during the early 1980’s heyday.
It’s also the metal that caused me to lose my job with Conti-Commodities as they were the brokers who went belly up when the Hunt Brothers tried (and failed) to corner the silver market.
Hence, it became the metal that forced me into a career as an independent floor trader. Hi ho Silver!
As we look at the weekly chart, ask yourselves-is that gray hair or a silver lining?
The weekly chart (each bar represents one full week) has several moving averages illustrated.
The green line is the 200-week moving average. The blue line is the 50-WMA.
The red line is an exponential MA I’ve layered in, but not as important to me as the 50 and 200-WMAs.
The 2 black lines are really cool. That is a channel that goes back to the 2015 low and connects with the 2017 lows making it a valid trendline.
The top parallel connects the 2015 high to just about the 2016 high.
Currently, SLV or the ETF for silver futures trades below both the 50 and 200-WMAs.
After a brief stint trading above the MAs in early September, disappointed longs exited quickly, driving the price down back below the MAs.
That makes perfect sense as silver has yet to show much to the bulls.
I’m watching for SLV to clear the MAs first and foremost. Although I will not hesitate to buy a starter position, aggressive buying is best saved for a clearance of 17.58, the 2017 high.
One important tip I can give you about commodities trading-when buyers emerge in droves, the moves happen blindingly fast, defying old resistance points.
So, no worries about picking a bottom-or plucking out the gray hairs. When she’s ready, she will sheen!
S&P 500 (SPY) 254.50 a good pivotal support number as this eked to new highs
Russell 2000 (IWM) 149 now pivotal resistance. 146 the major underlying support. Might be conveying disillusionment with the US economy going forward.
Dow (DIA) Wash, rinse, repeat-New highs
Nasdaq (QQQ) New highs-147.75 support held.
KRE (Regional Banks) 55.50 pivotal support. 54.60 the 200-DMA
SMH (Semiconductors) Resting
IYT (Transportation) 178.35 resistance with 176 big support
IBB (Biotechnology) Inside day as this awaits political news. 339 pivotal resistance and 335.50 near term support
XRT (Retail) 40.00 pivotal
IYR (Real Estate) 80.30 support
XLU (Utilities) Back to an unconfirmed bullish phase
GLD (Gold Trust) I talk about SLV but this looks better over the weekly MAs
GDX (Gold Miners) 23.67 the overhead 50-DMA. 23.00 support
XME (S&P Metals and Mining) A close over 33.20 better
USO (US Oil Fund) 10.65 some daily chart resistance
XLE (Sel Energy Spdr Fd) On this weekly chart, 69.08 must clear
TAN (Solar Energy) 22.00 now the pivotal number to hold
TLT (iShares 20+ Year Treasuries) 123-126.09 range
UUP (Dollar Bull) 24.30 pivotal and 24.00 pivotal support
FXI (China) 46 first support area to hold
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