Men Who Stare at Charts: Silver

It’s a new series called Men (or women, as applicable… let’s not forget Louis Yamada and her heavily rotated call about a bond bear market a couple years ago based on nothing but a single trend line she drew on the 10yr yield) Who Stare at Charts. The older I get and the longer I am in this business the less patience I have for bullshit, especially coming from TAs being portrayed in the media as being in any way profound.

This week on Men Who Stare at Charts, presents a gentleman who is staring at silver’s daily chart:

Precious Metals Bulls May Get Their Silver Bullet After All

With a 2-1/2 year low of $13.91 an ounce on September 11 and a three-week high of $14.55 on September 25, silver futures on New York’s COMEX appear to have bottomed out, says Mike Seery, who studies technicals for an assorted number of commodities at his Seery Futures office in Plainfield, Illinois.

“If you take a look at the daily chart, the downtrend line has been broken for the first time in months,” he said, adding that it was a signal that the worst was over, at least for now, in silver.

Well, he “studies” (err, stares at…) technicals for assorted commodities, and so…

“I will be looking at a bullish position as the chart structure is starting to improve on a daily basis. Therefore the risk/reward could be in your favor in next week’s trade.”

When TAs use terms like “chart structure” what they really mean is ‘I stare at these stupid charts all day long trying to see something that 10s of Millions of other men and women (aka technically armed casino patrons) who stare at charts don’t see; but we all see the same thing and when I contribute my viewpoint to I need to make it sound differentiated. I see “structures” that lead me to my conclusions’.

We – men who stare at charts – all see the same thing. Get that? We twittle with different scales, momentum, volume and trend indicators, but we all see the same thing. The fucking stock is either going up, going sideways or going down.

As to the trend line break in silver, All. Trend. Lines. Break. Eventually. I happen to be long the silver bullet from the washout lows, but let me tell you that the shorter the chart’s time frame (daily here) the shorter the efficacy of calls made by men who stare at charts.

What we have technically in daily silver is a break of the harsh downtrend channel after a positive RSI divergence and a bounce thus far above the EMA 10 and a try for the EMA 20. The trend remains down across daily, weekly and monthly time frames.

There is no bullish technical signal beyond a bounce. It could go on to become bullish, but in this case the man who stares at silver’s chart is managing day traders and little more. “The worst was over, at least for now… “. In other words, silver was due for an oversold bounce by the “chart structure”.

Later the article goes on to note the industrial virtues of silver before rounding back to the men who stare at charts. Per ADM Securities..

Now, Seery and ADM Investor Services, which also plots daily technicals on commodities, think silver may be able to hold its own against bullion:

“Stochastic indicators are rising from oversold levels, which is bullish and should support higher prices,”

ADM said of silver, on Wednesday, referring to momentum patterns that compared the white metal’s closing price to a range of prices over a certain period. “The next upside target is 14.407,” ADM added.

And finally, the first man who stared at silver’s chart wonders why it’s so low with crude oil so high. Maybe he’s been staring at charts for so long he’s forgotten rational thought processes like “WTF does oil have to do with silver?” Last I checked silver did not have cartels and whole countries manipulating its supply and demand fundamentals. Just the imaginings of the high priests of CoT conspiracy.

Seery compares the value of silver to crude oil, another key industrial commodity currently trading at near four-year highs. He added:

“I think silver prices are way too low compared to crude oil at this time. I also think that the volatility will certainly kick up in the next couple of months, which will be a good thing to see.”

This is the kind of post that comes about when I have not finished my coffee.

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