Silver Futures about to Go Parabolic

A huge huge development occurred yesterday in the SLV ETF and the silver futures market.  The SLV blasted higher to a new 52 week high on a big surge in volume.  This now appears to be a clear signal that the SLV ETF is going into parabolic mode and could imply a move to 50 dollars which is near the old spike high of the 1980’s.  In fact that is BestOnlineTrades current forecast for silver and the silver ETF.

There is much less resistance force between 30 and 50 if we look at the multi decade chart of silver futures.  Why is this important?  Because it means that silver can travel with much better ease of movement and is likely to show a faster and more persistent trend up until the 50 range.

So we now appear to be entering the true momentum phase of the silver price move, also known as the vertical parabolic move.  If you were trading tech stocks during 1999 into the year 2000 then you know what it feels like to trade hyper momentum.  One tends to see multiple big price percent moves day after day, then a few sharp pull backs in between, but then a new surge higher with amazing speed.  It is exciting to trade momentum like that but one has to be sure to keep a solid up trendline as your guide and prune profits along the way.

The initial move up in the SLV ETF from about 17 dollars was a huge initiation out of a very large inverse head and shoulders bottoming pattern in the SLV ETF and Silver Futures.  So that move equated into the huge run we have now.  If you look at the monthly or weekly price chart of the SLV ETF you can see that we went straight up for almost 4 months and then consolidated sideways in the form of a high tight flag.  Now we appear to be breakout out of this pattern.

slv20110218

So some simple math says that if we had about 13 dollars of the initial move up to the breakout point of the high tight flag we get about 43 dollars as a target.  But SLV will probably trickle higher than that on sheer momentum near 50 before it tops out.

Ideally for an entry next week we would see the SLV pull back near the 30 range to test the new support area at 30 now.  That would be an outstanding entry point after it is seen to confirm 30 as support.  I do not know if we will pull back to 30 but that would be the best possible setup for an entry in the SLV.

This is a HUGE story… but are we going to hear about it on business news or even mainstream news tonight? I doubt  it…

Posted in Commodity ETF, ETFS, Silver Futures
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7 comments on “Silver Futures about to Go Parabolic
  1. Eden says:

    Hi Tom,
    Are you still bullish on Silver at this point forward?
    we just past New high on GOld. Do you see any big pull back from here on silver and Gold?
    Maybe we are heading into parabolic phase then have sizable correction during summer time.

  2. Tom Tom says:

    I do not see any reason to be bearish on silver now… It does look like silver wants to get to the old 1980 high of 50 or close to it at least… But it may be a rocky road getting up to that point.. Basically the close silver gets to 50 the more nervous I would be getting because there should be some nasty correction near that level.

  3. Eden says:

    Thanks a lot for your comment.

    I think exactly the same as you do. Silver is trading at $35.50 now. another new high.

    Once we get close to $50 we will probably see a big correction along with Gold. But for now we are going to ride the C-wave of this last phase before that happens. Right now, the dollar is falling to 3 year low and will probably bounce from there.

    I would love to see your analysis when we are getting close to the top of this Parabolic move.

    Thanks again

  4. Tom Tom says:

    You are welcome.

    There may be some issue/debate however on what the exact old high was in 1980…

    Obviously this is a potentially very important issue concern with respect to the current run up.

    But in the final analysis I don’t think one can expect to get out at the exact high.

    I will do more coverage on the silver futures and gold futures in the weeks ahead…

  5. Eden says:

    THank you Tom

  6. Eden says:

    Tom,
    Do you have any thoughts on today’s market action on Precious mentals?
    I am actually looking at the Dollar index and it went down so the commodities in general rallied afternoon today.
    Do you see the Dollar going down towards the November 2010 Low? if that happens I think Precious metals will go higher until then. Or do you see the gold and silver topping here?
    What’s your take on this?

  7. Tom Tom says:

    I will try to do an update before the end of the weekend on the metals…. very interesting action…

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