The silver market has proven itself to be far too dangerous for the average retail trader, and the markets are likely to be a very dangerous place to trade at the moment.
Silver Futures
The silver market rallied a bit during the trading session on Tuesday, testing the $90 level, but it must be stated that later in the day we saw a lot of selling pressure. This could be the beginning of something a little uglier, and if we break down below the 50-day EMA we could see the silver uptrend at least stopped for a while if not wiped out.
The candlestick from last Friday is one of those moments in a market that doesn’t come along very often, and quite frankly, you don't see moves like that without some type of follow-through. This is why it's been very difficult for me to analyze silver because quite frankly, I know as somebody who's been in the market for more than 20 years that the odds favor something really ugly happening before it's all said and done.
A Broken Market
That being said, it's also worth noting that silver has a fundamental shortage from a physical supply and the overall market have a lot of issues as the spread between Asian and North American prices are wide enough to drive a truck through. This is a completely broken market and typically speaking, a broken market causes chaos and generally falls.
Now, I'm not saying that silver has to drop drastically from here, but at this point in time, it would not be surprising at all to see this market test the $70 level. If we break down below the $70 level, that could really unravel things; we might even be talking $50 again.
I think at this point in time, the silver market has proven itself to be far too dangerous for the average retail trader to handle and therefore I am very, very cautious about trying to get involved. I wouldn't necessarily short the market, but if I had to go long, I would do it with a very small position.
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