- Silver has rallied almost 2% during the trading session on Tuesday, as we have seen weaker than anticipated economic figures coming out of the United States.
- More specifically, we have seen lower than anticipated Consumer Confidence numbers, and a miss by the JOLTS figure by 1 million job openings.
- In other words, people were celebrating the idea that perhaps the US economy is finally slowing down, and therefore the Federal Reserve may be able to loosen monetary policy much sooner than anticipated.
The problem of course is that they don’t make that decision, the Federal Reserve does. Interest rates of course have a part to play in this, but at this point we are still very much in an overall consolidation area. I certainly would not be a traitor willing to chase over at this point, and I think that the $25.50 level is a major barrier to overcome. It’s not until we break above there that I think we can really start to pick up momentum, and quite frankly if you are not already long in this market, then you probably have to step to the side.
The Market Continues to be Very Noisy
This is especially true since the Non-Farm Payroll numbers come out on Friday, and this of course makes a huge difference as to what the volatility profile will be. In other words, it would not surprise me at all to see a little bit of a pullback in the short-term, due to the fact that the market will probably be willing to take advantage of any profits that they already have, as you do not want to be overly exposed heading into such a volatile event.
The 50-Day EMA sits right around the $23.60 level and offers support, and therefore I think if you look at that as a short-term support or even floor in the market. All things being equal, I think that short-term pullbacks continue to offer buying opportunities, but I would not get aggressive due to the fact that silver is extraordinarily volatile to begin with. In general, I think this continues to be a very noisy market overall, therefore you need to be cautious with any position size that you throw out there. If we break down below the 50-day EMA, we could drop down to the $22.50 level.
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