I was disappointed by the weakness in the markets yesterday. I tried to buy two rallies in the Dow, but each came to nothing.
Still, there are reasons to be cheerful, despite the day's weakness. First, the S&P, Dow and Nasdaq did little more than pull back to intraday moving averages, which I see as a small correction after Tuesday's surge out of nowhere. And, sentiment is still reasonably healthy. Although there was a shift towards bullishness among individual investors last week, it's hardly irrational exuberance. The AAII data shows 35.4 per cent bulls vs 28.5 per cent bears. That's not an enormous gap, and it's certainly supportive of further upside on Wall Street, in my view.
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Silver has not so far bottomed in the timeframe that its 38-day cycle suggested was likely, i.e. around now. This comes as little surprise to me, as there are few other technical signs that hint at a significant low occurring. In particular, there is no oversoldness on the daily chart.
My attentions therefore shift to future dates where the next turn higher might occur. Both 22 May and 18 June are especially hot periods for a low in silver, according to this model. Seasonal trends also turn move positive from around the second of these dates – see the blue line in the lower panel.
So, if silver gets oversold (RSI 30 per cent or less) and then turns upward around one of these dates, I would take a long position.
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Dominic Picarda is a Chartered Market Technician and has co-ordinated the IC's trading coverage since 2006. He is a regular speaker at trading and investment events and also holds the Chartered Financial Analyst qualification.