Fundamental vs Technical explanation for early May silver plunge...
The following should assist you in understanding why we concentrate on Technical Analysis (charting) on this site. We start with a fundamental interpretation of the reasons for the plunge in the price of silver early in May. I emphasise that this was not by me but by some unknown party and received in an Email....
The Big Silver Con: Target $26/oz. Technical Support Line With QE2 Ending June 30th & July 4th Cover Story/Exit Strategy "Piggyback" Traders Legging into Silver Manipulation with "Tens of Thousands" of NYSE:SLV July $25/$30 and $25/$33 Bull Put Vertical Spreads and Shorting "Tens of Millions" of Shares of NYSE:SLV ETF
CTFC Commissioners continue their two and a half year long sham investigation of silver price manipulation and illegal trading practices by the JP Morgan Chase and HSBC banks (1). Mean while, non-commercial traders netted $500 million dollars over the 3-week period immediately surrounding the recent May 1st 30 percent "drive-by-shooting" silver price takedown (2), using computer automated trading "bots" to "transiently create thousands and, sometimes, tens of thousands of intra-day short positions" (3). But these things have all happened before, so we know what to look for, such as: "Create an exit strategy- a good catalyst like Easter weekend, an announcement by an investor etc. or develop a market and grow your own bigger fool. ie – retail." (4).
Just when you might have thought that the worst must be over, the stage is only being set for the Coup de grâce! Prior to the May 1st "drive-by-shooting" of the silver price takedown, piggyback traders of the automated High-Frequency-Trading (HFT) banks established "tens of thousands" of OUT OF THE MONEY PUT OPTIONS for July expiration (5), forming the debit portion of Bull Put Vertical Spreads. Subsequently, the same piggyback traders are legging into "tens of thousands" of NYSE:SLV July $25/$30 and $25/$33 Bull Put Vertical Spreads. In addition, the same piggyback traders are in the midst of shorting "Tens of Millions" of shares of the NYSE:SLV ETF (6,7).
The HFT banks are the midst of "growing their own bigger fools" (i.e. retail). Presently the HFT "bots" are focused on preventing the spot price of silver from penetrating the 50-day SMA from beneath. The purposes of which are to preclude re-entry of the technical traders, restore some semblance of price stability and plausibility, and bide time until the next and more brutal price attack, believed to coincide with the end of QE2 and the July 4th holiday closure of the U.S. markets, to provide extended minimal trading volume opportunity, plausible cover story and requisite exit strategy (3,4).
The criminally complicit conduct of the CTFC Commissioners, the CME Group (Owners of the COMEX and NYMEX exchanges), and the BlackRock company (Trust sponsor of the NYSE iShares SLV ETF), and the underlying illegal conduct of Ms. Blythe Masters' Global Commodities "Team" for JP Morgan and HSBC banks, have collectively provided a tremendous buying opportunity for "the replacement of weak hands with strong ones" (3).
and now Maund's technical assessment of the reasons for the plunge in silver early in May...
"Silver had become horrendously overbought by the end of April, with a massive increase in speculative interest by ignorant opportunists. This led to the price crashing back towards its 200-day moving average early in May."
It is hoped that these differing explanations will make it abundantly clear why we tend to favor the use of Technical Analysis on this site. My time is valuable and so is yours, and we don't want to fritter it away on crackpot theories and rambling hyperbole.
Wouldn't it be interesting if these people were right though? - as it happens their downside target of $26 for silver fits with our assessment that another sharp downleg is likely before this retreat has run its course, and if it happens we will be ready and waiting.
is an English technical analyst, holding a diploma from the Society
of Technical Analysts, Cambridge, England. He lives in Chile.
Copyright ©2003-2011 CliveMaund. All Rights Reserved.
Charts courtesy of StockCharts.com.