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Silver Market Analysis

The silver market has started out a touch weaker this morning and it would appear that the somewhat tight coiling pattern on the charts is set to continue into the last trading session of the week. Silver might be seeing some minor pressure off overnight news of a very minor rise in silver production from Peru in the month of February, but recently the silver market hasn’t paid that much attention to classic supply side developments. Perhaps silver is drafting some indirect support off GFMS predictions of firm industrial demand for silver ahead, but those views have been given less credence because of the doubt surfacing toward the US and Chinese economies. Silver and other physical commodity markets might see some support from an attempt to boost IMF reserves by $400 billion, as that could give the IMF the capacity to keep the Euro zone crisis under control. The bull camp continues to tout the pattern of rising open interest, which earlier this week reached up to 121,448 contracts, as that might suggest to some, that long accumulation is taking place during the consolidation pattern of the last three weeks. Comex Silver Stocks were 138.015 million ounces down 22,099 ounces. Silver stocks have increased 12 of the last 20 days. While silver generally sits near the upper end of this week’s somewhat tight consolidation zone, the tightness of the recent range also suggests a lack of definitive opinion in the marketplace. Silver should be partially emboldened by the capacity to get beyond the Euro zone fears this week and silver should be partially hopeful of more upcoming assistance from the PBOC but the market might also be generally discouraged by the flow of US scheduled data this week. The bear camp in silver thinks that the US economy is slowing but that it might not be slow enough for the Fed to act yet and that type of setup might leave the bears with an edge. While the stock market might provide some underpin to silver prices into the opening today, the failure to post solid corporate earnings news this morning, could allow stocks to weaken and that in turn could allow May silver to slide toward consolidation support down at $31.34.

Technical Analysis

COMEX SILVER (MAY): Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend. The daily closing price reversal up is a positive indicator that could support higher prices. It is a mildly bullish indicator that the market closed over the pivot swing number. The next downside objective is 3096.4. The next area of resistance is around 3208.7 and 3241.3, while 1st support hits today at 3136.3 and below there at 3096.4.

 

StockMarketNews Research Team

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