Technical analyst Clive Maund charts silver and
explains why he believes the metal's prospects are changing.
Silver continues to be a singularly neglected and unloved investment, and
has been for years now, but as we will proceed to see, this is not a
situation that is likely to continue for much longer.
On its 10-year chart we can see that silver has basically been moving
sideways marking out a low base pattern since late 2014-late 2015, following
a severe bear market from its 2011 highs. For a while this year it was
thought to be marking out a downsloping Head-and-Shoulders bottom, but with
the renewed decline from June through late August, it was clear that the
pattern had morphed into something else, and on the basis of what we are
seeing in other metals, principally copper, gold and platinum, it now looks
like it may instead be completing a large Double Bottom pattern, and if this
is what it is, then it is very close to the second low of the Double Bottom
here, and thus at an excellent point to buy.
On the 6-month chart we can see that the second low of the giant Double
Bottom shown on the 10-year chart appears to have taken the form of a tight
Head-and-Shoulders bottom. About two weeks ago it looked like a neat and tidy
pattern was completing, so the drop early last week came as something of a
surprise, but Thursday's high volume rally was a bullish development that
restored the bullish look of the pattern, which at this point looks like an
irregular Head-and-Shoulders bottom with two small right shoulders.
Interestingly, it stalled out again on Friday at the resistance at the upper
boundary of the pattern, showing how important it is, and while it could back
off a little bit short-term, it looks like it is getting ready to break out
of it.
Thus it is interesting to observe silver's latest COT chart, which
certainly looks bullish as it reveals that the Large Specs remain completely
demoralized regarding silver, as they are still short, which is good to know
as they always overall wrong.
Click on chart to pop-up a larger, clearer version.
Although it has eased somewhat in recent weeks, the latest Hedgers chart
still presents a strongly bullish picture for silver, as large commercial
Hedger's positions are still historically at a very low level.
Click on chart to pop-up a larger, clearer version.
Chart courtesy of sentimentrader.com
We have just entered November, which our seasonal chart reveals is a
better month for silver than October, and it is interesting and timely to
observe that this marks the start of the most positive period of the year for
silver, on a seasonal basis.
Chart courtesy of sentimentrader.com
Finally, since it is unlikely that gold and silver will advance without
other metals like copper and especially platinum "coming along for the
ride", it is worth looking at the latest charts for copper and platinum.
As we can see below, a parallel Head-and-Shoulders bottom has formed on both
the copper and platinum charts, although the Left Shoulder low on the charts
of both these metals occurred in July, whereas the Left Shoulder low on the
silver chart formed in August. Apart from this detail though, these charts
are supportive of an upside breakout by silver soon, as copper, with its high
volume up days, certainly looks like it is readying to break out to the
upside, and platinum already did so on Thursday last week, which was a
positive development for the metals sector generally.
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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not
of Streetwise Reports or its officers. Clive Maund is wholly responsible for
the validity of the statements. Streetwise Reports was not involved in the
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Charts provided by the author.
CliveMaund.com Disclosure:
The above represents the opinion and analysis of Mr Maund, based on data
available to him, at the time of writing. Mr. Maund's opinions are his own,
and are not a recommendation or an offer to buy or sell securities. Mr. Maund
is an independent analyst who receives no compensation of any kind from any
groups, individuals or corporations mentioned in his reports. As trading and
investing in any financial markets may involve serious risk of loss, Mr.
Maund recommends that you consult with a qualified investment advisor, one
licensed by appropriate regulatory agencies in your legal jurisdiction and do
your own due diligence and research when making any kind of a transaction
with financial ramifications. Although a qualified and experienced stock
market analyst, Clive Maund is not a Registered Securities Advisor. Therefore
Mr. Maund's opinions on the market and stocks can only be construed as a
solicitation to buy and sell securities when they are subject to the prior
approval and endorsement of a Registered Securities Advisor operating in
accordance with the appropriate regulations in your area of jurisdiction.
