Ladies And Gentlemen...start Your Computers

Unlike the past several weeks this week opens with new promise. Of course in this casino new promise can sometimes end in bitter dissappointment so as usual one must do their own DD. What I can say now is the elements that made me so negative on the precious metal trade a month ago have now had some breathtaking corrections…. especially in the silver trade. Silver alone is now down over 30%. In anyone’s book that is a nice discount. Of course that doesn’t mean it can’t get cheaper and my hope that they can break 30 is still in play of course. If they do break 30 and they do it this week it would bode well for a nice trading bottom……..certainly an amazing short term trading entry point if it were to occur.

What really has piqued my interest is the $HUI chart. We are resting at very tempting levels for at least a trading opportunity in the miners. This has been a very extensive, time consuming beatdown of this trade and has taken a lot of steam out of the 2010 end of the year rally in these miners. If I am right we are getting very close to a bottom in these miners. Ideally we should get a few days more of chop with a break above the 200ma and a retest before setting a new higher low confirming a nice turn up in these stocks. If you are a longer term swing type trader then this is certainly a place to buy some of the less beta plays like EGO GFI and HL. If you are a shorter term trader I also like these stocks here for at least a bounce. My beta plays on silver are still SSRI and SLW and they are also in that buy zone. As usual these set ups can be bull traps to entice you into a further chop shop to shake you out but if you are going to play in the casino you have to take your positions when these set ups present themselves. Am I calling a bottom? NO NO NO. I’m only saying if you lost your core a month ago then you can reposition yourself here. If you are a trader it doesn’t get much better than that. The downside here is that the dollar appears to be strengthening further and QE is soon leaving the stage. I contend that QE will be reinstituted in some other form. I am not alone in this belief. Politically it will fall under some other nomenclature. I am not going to play the alphabet game in this thread but they have NO choice but to continue to monetize this “recovery”.

We are in desperate straits and they are not improving except in the minds of the talking heads that are placed on the your TV screens everyday to try and restore the prole’s CONfidence. Nothing has changed in the last two years. We had a chance to address the structural damage done to our system by the corruption and excesses created by a finacial system gone wild…..but that wasn’t in the cards. Now as investors we have to recognize the cards that are dealt and play them.

One last admonition…..we are finally getting fear in the silver trade and this is absolutely one hundred percent necessary for this trade to move into its next phase. Technically it needs to repair some damage so I would like to see some time spent in the 33 to 49 range. Let’s see if this happens. If we get a nice cup and handle over few months then it could be a great end of year set up. This trade was too easy but now its in the zone I am more comfortable with. Do you throw in “all in” here?? No, but you can add carefully or start a new trading core position. PSLV is warming.

Finally soft commods….in particular sugar. I was asked recently about SGG. The 65.8 low was a 61.8 fib correction from the big move last year to the high 103.5. If you wanna roll um then this is in play now. gl gl gl…. don’t get heavy in it.

Read more at Great Depression 2