SLV
Silver vs. GoldIf a bull market in precious metals is truly underway, we want to see silver outperforming gold!
THE WEEK AHEAD: CSCO, SLV, IWM, VIX/VIX DERIVATIVESEARNINGS:
CSCO (46/40) announces earnings on Wednesday after market close. The metrics aren't ideal here with the at-the-money 42.5 short straddle in June paying 4.39, just a smidge north of 10% of the value of the underlying (10.2% to be exact) and the month to month implied differential almost nil (June's at 40.5, July at 40.3%). Nevertheless, a bet that CSCO stays within its expected move -- the June 19th 40/46 short strangle is paying 2.00 at the mid price here with break evens at 37.99/48.01.
EXCHANGE-TRADED FUNDS ORDERED BY RANK WITH >35% IMPLIED:
SLV (62/44)
EWZ (51/63)
GDXJ (51/63)
GDX (49/51)
EWW (45/40)
XLE (41/48)
USO (34/110)
SMH (32/38)
XOP (30/61)
BROAD MARKET FUNDS ORDERED BY RANK:
IWM (52/42)
EEM (39/31)
EFA (35/24)
QQQ (30/29)
SPY (26/28)
IRA DIVVY-PAYERS ORDERED BY RANK:
EWZ (51/63), 5.15% Yield
EWA (51/42), 5.31% Yield
EWW (45/40), 4.26% Yield
IYR (43/34), 3.77% Yield
XLU (41/31), 3.48% Yield
EWU (37/28), 5.56% Yield
EFA (35/24), 3.79% Yield
HYG (28/18), 5.49% Yield
TLT (27/21), 1.79% Yield
SPY (26/28), 1.98% Yield
EMB (26/20), 4.92% Yield
Notes: Kind of a new section here to track background IV for potential acquisitional plays for the IRA in dividend yielding exchange-traded funds. Currently, running short put ladders in IYR, HYG, XLU, and EWA, but now that I've gotten organized here, may consider similar setups in EWZ (5.15% yield), EWW (5.31%), and EWU (5.56%).
VIX/VIX DERIVATIVES:
VIX finished the week at 27.98 with the /VX term structure in front months contango. Back months are still "wonky" and present a (for lack of a better word) sinuous path from here to December.
TRADE OF THE WEEK:
Pictured here is a Plain Jane delta neutral IWM short strangle in the June cycle (40 days) paying 3.37 at the mid price. The highest implied, broad market exchange-traded fund on the board at the moment.
Silver Could Outperform Gold in Coming WeeksToday is the big day! The Bureau of Labor Statistics releases the unemployment number at 8:30AM EST. As I am writing this post, U.S. index futures are pointing up and so are Gold and Silver . This morning I'll be touching upon the CBOE Volatility Index (VIX) and Silver Futures (SI!).
The VIX
Bears will be watching the VIX closely today and they should be. Below is the monthly chart of the VIX.
Is it possible to build a bearish case for major indicies with the VIX? Maybe. It's a difficult instrument to chart when using indicators. So instead, I like to use the line chart to cancel out the noise. Notice how support and resistance comes out more cleanly.
Lastly, if you follow the URL below is an image of how the Put/Call ratio is now at its lowest point since early March. Sentiment in the market could be getting overly bullish.
stockcharts.com
Short term, I could see a rise on the VIX. Bias: Bullish .
Silver or is it a Slug?
I've been reading a lot of articles on Gold and how Silver is a major laggard. It's true, Silver moves a hell of a lot slower than Gold. However, that could be changing soon. The chart below is the weekly view of Silver Futures.
The sell off in March in my view was the definition of a terminal shakeout. Price should not retest those lows. If it did it would be bearish. There is strong support between 13.70 - 14 and dips are for buying.
On the chart I highlight the divergence between price and Chaikin Money Flow (CMF) during the sell off in March. Though, a technician should not use CMF by itself. Confirmation is required when a divergence like this is spotted. Here I am looking at MACD to confirm the CMF bullish divergence. Silver may be a few weeks away and could potentially outperform Gold. I'll be keeping an eye on this one! Bias: Bullish .
Happy Friday everyone and good luck trading the employment numbers this morning!
Silver Trendline TestSilver(Sl1!) closed at $15.59 from an opening price of $14.92 for a gain of $0.67(+4.49%) today. Price also closed just above the orange downtrend resistance line which is bullish seeing as how this line has been acting as resistance since early April. Going forward, we need to see price hold above the orange resistance line and make an eventual push above the horizontal red line at $16.30 which is a strong price level stretching back to July 2019 where price peaked and then eventually rose above, and then found support at again in late 2019. This level briefly acted as support in February 2020, but then failed in March with a rejection at that level coming in again in April. A move above $16.30 would be significant and likely mark the beginning of a new push back up toward $19. The stop-loss level for long trades rests at $14.50 which is near the low made in mid-April, as long as price remains above that level the short-term trend will remain bullish.
The Relative Strength Index(RSI) show the green RSI line rising up off of the 50 level which is the midpoint of the total RSI range. An RSI reading above 50 indicates bullish price momentum while a reading below 50 indicates bearish price momentum. The purple RSI signal line is also rising, but remains below the 50 level with a cross above looking to come soon. The signal line indicates intermediate-term momentum so that line rising above the 50 level would be another bullish indication that price is gaining upward momentum.
The Price Percent Oscillator(PPO) show the green PPO line and purple signal line overlapping at the 0 level. In general, you want to see the green line rising above the purple line and for both lines to be trending up and above the 0 level. Both lines trending up above the 0 level indicates bullish price momentum.
The Average Directional Movement Index(ADX) show the green direction line trending above the purple direction line which indicates a positive trend in price. The histogram behind the ADX lines is trending flat which indicates no strength in the trend yet. In general during an uptrend, you want to see the green line rising above the purple line and for the histogram bars to be rising as a sign that the trend is increasing in strength.
Volume is relatively low, but beginning to show a slight uptick. Should price continue higher we would want to see volume rise in order to sustain the movement in price to the upside.
Overall, silver is looking good here today with the strong move in gold. The gold-to-silver ratio remains near all-time highs at 112:1, meaning it takes 112 ounces of silver to equal ounce of gold in price. Historically, a ratio of 80:1 is considered high and a good time to enter silver trades. The historical average over the past 5,000 years is a ratio of 15:1, so we’re either looking at gold price being extremely overvalued, or silver being extremely undervalued. It’s my opinion that both are still very undervalued with silver being the more extreme of the two. As gold continues to gain in price I expect silver begin to close that ratio and outperform gold as silver usually does during periods of bullish trends in the precious metals space.
Tricky Silver, Tricky Metals...Silver looks bearish but it will follow gold.
In the bullish count, we don't have the 1-4 overlap to define the upward sub structure as a leading diagonal. Very tricky.
Algos are pushing prices higher.
QQQ - Test of the High FailYesterday the battle to take out 219.07 raged on but in the end, The Qs fell short of taking out the monthly closing high. This is my first major sell signal. It is possible that prices will move higher as the inter-month high in February moved above 237, still nearly 10% higher than current prices so I will look for inter-month, i.e., daily or weekly signals in addition to other statistical indicators I follow to give me a better timing model. I traded SQQQ this week, a 3X down but decided I did not want to be that aggressive trying to pick a top, especially in a vehicle that has been as strong as QQQ even as we face a possible depression of unknown proportions.
For now, I am totally on the sidelines (stocks) with only a position in SDS, a 2X down instrument for SPX. I liquidated gold and silver stocks for the week but have October puts and short calls on SLV. While the trading action this week has shown strength, seems that the gold/silver cycle is topping and I wait patiently for better prices.
THE WEEK AHEAD: AMD, TWTR, FB EARNINGS; SLV, GDX, GDXJ; EWWEARNINGS:
There are a ton of earnings coming out next week, with the most options liquid plays to be had in AMD (44/71), TWTR (77/80), and FB (59/50).
Pictured here is a delta neutral short strangle in AMD in the June cycle (54 days). Camped out around the 20 delta strikes, it paid 3.12 as of Friday close (5.6% as a function of share price) with break evens at 42.88/73.12. Go defined risk with a five-wide iron condor in the same cycle -- the 42/47/70/75, and you'll get paid 1.48, 29.6% return on capital at max, 14.8% at 50%.
A TWTR June 19th 24/36 short strangle paid 1.83 (6.4% as a function of share price) as of the Friday close; the FB June 19th 165/220, 7.07 (3.7% as a function of share price). Consequently, if you're looking for "buck bang" as a function of share price, your best best is going with the TWTR play, with its higher 30-day.
EXCHANGE-TRADED FUNDS WITH 30-DAY >35% ORDERED BY RANK:
SLV (83/51)
GDXJ (72/79)
GDX (64/63)
EWW (61/60)
XLU (60/40)
EWZ (57/72)
XLE (55/66)
SMH (46/46)
XOP (42/81)
USO (33/192)
USO is going to be undergoing a 1:8 reverse split after the close of markets on April 28th, so you may want to steer clear of entering an options play before then and/or close out any options plays you've got on here to avoid being stuck with nonstandards post-split. As if it wasn't apparent, the juice is in precious metals/miners (SLV, GDX/GDXJ) and oil-related exchange-traded funds (XOP, XLE, USO), with some secondary squeezings to be had out of Mexico (EWW), Brazil (EWZ), and semicons (SMH).
With respect to EWW and EWZ, I considered each for a potential IRA trade, since both pay dividends, although they're only twice a year and somewhat "uneven." (EWW yield shows as 4.93%; EWZ as 5.44%). The EWW June 19th 22 was paying .78 as of Friday close (3.7% return on capital at max), the EWZ June 19th 18, .96 (5.6% return on capital at max), so may consider doing one or the other as a potential aquisitional play.
BROAD MARKET EXCHANGE-TRADED FUNDS WITH 30-DAY >35% ORDERED BY RANK:
TQQQ (60/111)
IWM (56/45)
EEM (46/39)
QQQ (43/36)
SPY (39/35)
FUTURES WITH 30-DAY >35% ORDERED BY RANK:
/NG (98/95)
/SI (83/500
/RTY (56/55
/NQ (43/36)
/ZC (43/36)
/ES (39/36)
/CL (33/948)
VIX/VIX DERIVATIVES:
VIX finished the week at 35.93, well in "high volatility" territory. However, the May and June contracts (36.95 and 35.70, respectively), finished in contango (it's been a while), with the rest of the term structure in backwardation.
Short term view of SilverSilver has risen since my last posting (see link below). We may get a short term consolidation here if this is .3 then another rise to .5 then a correction. Or we if this is .01 of .3 we get a rapid extended rise from here. We'll see. If price drops below .1 this concept is wrong.
Take care.
$GOLD Textbook Nike Swoosh Pattern Forming$GOLD Textbook Nike Swoosh Pattern Forming
$GLD $GDX $XAUUSD
Silver - B-Wave Top?After the stunning drop in silver prices, wiping you any hope of a Bull run, a number of indicators have led me to turn bearish. Price ran up to the 50 Day EMA and struggled. Price retraced a bit more than 50% of its decline, failing to make it past the .618 retracement level, an action that would indicate more bullish price activity to come. Stochastics had been in overbought area and is starting to turn down. It has not yet given a sell signal as Stochastics should break below 80 for that to occur. For me the key indicator to sell premium was an indicator that can be reflected to some degree in the BBW indicator. I track price data on an Excel spreadsheet on various time frames. This number reversed in the 4, 10 and 20 day time frames. This indicates that the upward price momentum has stopped and prices will either drift to the trend line or go to the opposite extreme.
My 20-day trend-line comes in at 13.62. That is the first level that I can expect price to hit. Prices could go much lower though if this move is the start of a Major C wave down. It's possible that price could test the $10 level! That's what the Fibs show. While this seems improbable as there is scarce physical supply in the metal, Computer algorithms are not programmed to look at fundamentals.
While I sell options on the paper side, I continue to buy physicals on a regular basis, as they become available, without regard to price. I've seen silver premiums as much as $9 above spot. Still holding the LEAPs. That gives me a good base to short options against with minimal margin requirements. If we do get down to the $10 level on the paper side, I'll load up on the $10 2022 LEAP options, assuming that physicals will never be available at this price.
WANT TO TRIPLE YOUR MONEY WITH SILVER? HERE IS THE LOCATION...Hello everybody,
I am seeing a huge opportunity for Silver bugs. It looks a lot like a silence before the storm for the upside. If Gold ends up going ATH, i think there will be more money moving into commodities such as silver as well. I believe this may be the Altcoin idea you have been waiting for. It almost looks like 2017 Ethereum buying opportunity.
DO YOU OWN RESEARCH. IF BULL IS ON, WE WILL BREAK THESE RESISTANCE. ALWAYS HAVE STOPS. DONT BET MORE THAN 5%. PLAY FROM A POSITION OF STRENGTH.
Best wishes
Sincerily
Bo Bugra Sukas
$GOLD is proving a store of value in this crisis. Proven. Chart.$GOLD is proving a store of value in this crisis. Proven. Chart.
$XAUUSD $GLD $GDX
