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Silver Market Analysis

The bulls in silver can probably claim that silver is less vulnerable to long liquidation than gold, given the relatively smaller long positioning in the last COT report. At least at the start of the Tuesday trading session, the bear camp looks to have an edge, as the entire metals complex is tracking lower and most outside market factors are initially favoring the downside tilt. Like gold, silver needs to see a shift in sentiment toward the Euro zone situation and a return to more of a risk-on vibe. The bear camp for its part continues to suggest that the last two weeks consolidation pattern is a sign that silver prices might have become too expensive and that some buyers are starting to back away as a result of high prices. Therefore the last two week’s low of $32.93 might be seen by some as a key pivot point in the coming trading sessions. Comex Silver Stocks were 130.896 million ounces up 33,801 ounces. Comex Silver Stocks are now at the highest levels since 10/27/2008 and silver stocks have increased in 14 of the last 20 days. The March silver contract enters the trade today in a downward bias on the charts and is close to what could be very critical support at $32.93. In fact, the failure to hold the prior session’s low of $32.98 could present an initial wave of stop loss selling by some weak handed longs. However, some bulls will probably attempt to hold long silver positions until there is a definitive breakdown in the Euro zone attempt to save Greece. The bull camp in silver might view the net spec long in silver of 32,000 contracts, as modest long positioning which in turn could limit the amount of liquidation pressure ahead.

Technical Analysis

COMEX SILVER (MAR): Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The close below the 9-day moving average is a negative short-term indicator for trend. The market tilt is slightly negative with the close under the pivot. The next downside objective is 3264.9. The next area of resistance is around 3408.2 and 3441.8, while 1st support hits today at 3319.8 and below there at 3264.9.

 

StockMarketNews Research Team 

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