More downside risk in the weeks ahead

These are gloomy times for the markets and investors but not so for traders as good money is being made as the markets appeared to be trending lower. Rallies to resistance were pounced on by new short-sellers and desperate investors wanting to dump their stock holdings. Many stocks from different sectors are already at favourable level to initiate low risk shorts. I have an earlier post here last week (click to read) whereby i had discussed on the failing energy sector as oil prices look like they are ready to drop as dark clouds loomed over the weak economy. This is a 'short the rally' market. Any bounce in prices are good opportunities to offload your holdings if you are still not in cash position. Do not fight the downtrend.


ERY Drexion Daily Energy Bear 3X

LVS - Las Vegas Sands

APKT - Acme Packet Inc.

CAT - Caterpillar

GE - General Electric; widely know as the bellwether stock of the economy was seen leading the charge down through the 200day MA. Definitely a sign of bad times to come.

Prices for precious metals are also breaking down as the Greece fiasco played out in the media. The markets are forward looking and I believe they are already pricing in for a higher US dollar environment. I have no idea what it will mean for Greece though but the markets apparently doesn't think its good !

Gold

Silver

The financial sector looks beaten down. However i wouldn't touch them yet. I am keeping a close watch on the financial stocks for any signs of life as they should be the sector that will lead the economy out of this bearish market.

Good weekend to all.

Silver - Technical Analysis

Silver dropped more than 30% from its high of $48.35 on huge volume indicating possible selling by big institutional players. Any relief rally should be sold as i think many investors caught in the sell-off who did not react in time will be anxious to sell off their holdings. Who knows, we could have possibly seen the high of Silver already. You have to be very flexible here as Silver is a high volatility trade, not for the fainted heart.

Have a good weekend!

Silver - First wave of selling

Dear readers,

Price of silver is currently feeling the heat as the first wave of sell-off begans.

If you are on the sidelines now and waiting to go long, i would suggest that you wait for a bounce on the daily charts at the support indicated on the chart above. However, you would have to be very flexible here if you are going long on Silver as this could be a top in the making. Note the doji on the weekly charts.

If  you are looking to go short on silver and are currently on the sidelines, i would suggest that you wait and see if Silver would bounce off support and re-test its near term high of $48.35. Any rally and failure to hit $48.35 would be a double top signal.

Where are the market players?
At this point in time, trend traders would be on the sidelines and waiting for a break of the neckline before igniting any short postitions while fade traders (traders who buy or sell reversal) would have already ignited their short  trades at $47.50 or waiting to enter long at the bounce at support or enter short at any subsequent failed rally to test the near term high of $48.35 to execute their trades.

Fade traders have the highest reward ratio than trend traders but of course the risk are higher. Catching the top dollar pays you well but it could be very expensive if it is not executed properly.

For me, i'll be on the side lines stalking silver to see how it would react on its support and its next attempt rally, if any.

Mighty Silver - Parabolic

Silver is going parabolic. The combination of early short sellers scrambling to cover their shorts and late buying by the public are pushing Silver to dizzy highs. Media reports everywhere are talking about the massive silver bull run and this will bound to draw in public interest. We'll need a blow-off top to suck all buyers in and to kill off all early short-sellers before the sell-off can begin. Nothing goes up forever and when the selling off begin, it could get nasty. For now, the silver bulls will have their day.

Silver - Hanging man bearish reversal pattern spotted

I was stopped out of my short-silver trade the last two times round. And i here i am today taking the trade again the third time on the basis of a hanging man bearish reversal candlestick on high volume for Silver ETF (SLV). This will be a trade with a tight stop loss just below the low of the hanging man. While a hanging man pattern does not mean that it is a short, but it does appears on an uptrend increase the probability of that the trend might be changing. And remember, trading is a probability game. Could this be the top for Silver? Catching the top dollar has always been the most expensive!!

Remember to always trade with stop loss!

Mighty Silver - At important reversal pivot point ?

Super huge volume on reversal candlestick pattern for Silver... 
And shorted Silver i did... via ZSL (Proshares UltraShort Silver ETF)

Mighty Silver

I was stopped out of the ZSL trade about 2 weeks ago. ZSL is a short silver ETF. At that point in time my analysis was that they were high probability trades going by the volume and price action but lo and behold... Never said never in the stock market. I always adopt this mentality when placing trades that : "I am going to be wrong most of the time". If the inevitable comes and the loss has to be taken, take it and move on!

Just when you had given up on this trade, another signal appeared. What do you do now? We do not throw in the towel yet. If your style of trading prompted that its a signal (high volume with reversal candlestick) you should take, then you should not give this trade a pass. For all you know, this trade might work out. I'll said: take this signal again and buy ZSL the next trading day with stop loss at the low of the bullish piercing candlestick spotted at closing today. Note the huge volume which was even higher than the previous trade i took about 2 weeks ago. Golly....

Short Sliver ETF (ZSL):

High Probability trade for 25 March 2011

Here is the iShares Silver Trust (SLV). Silver made an all time-high of $38 on Thursday, 24 March 2011.

The daily candlestick pattern formed at the end of the day was a bearish dark cloud cover pattern with huge volume. I will look to short Silver via the short silver ETF (ZSL). This is a simple trade. Determine your stop loss which will be at the high of the day and then average in to your stop loss point. Late bulls will attempt to push the price action close to the all-time high which is why i will average into my stop loss price.