SILVER UPDATE

Despite the gap up this morning on the SLV, the price action today was relatively flat. The candlestick pattern formed at the end of the day is called a "spinning top". When it shows up at the end of an upward move, this pattern is considered bearish...although it does need some confirmation. The price action in the SLV last Thursday was very bearish. You usually don't see that price action without some sort of a pull back. This is why the gap up today was so puzzling. This is a good teaching experience though. As you saw with my NFLX recommendation, the downward move doesn't always occur exactly when we expect it. Sometimes these bearish price formations show up a few days before the drop takes place. The key is in recognizing the clues. I don't know if the SLV will drop here, but I wouldn't get too aggressive from the bullish side right now. I do expect a big move up later in the year, but there could be some shorter term selling before that move up takes place. If you do want to buy calls right now, buy them ATM and out to January. This way you have plenty of time for the expected upward move to take place.

Below are some comments that Chaz emailed me tonight. They back up what I have been saying:

I've been reading the success stories on your blog and I am a little concerned about the excitement over SLV . I'm too busy right now to write a regular commentary but felt I should at least send you a note. Please tell your readers to only risk money they can afford to lose in this market. I recently made it very clear that I DO NOT LIKE this market. It's dangerous. This is the kind of market that can be jerked out from under you without warning. SLV is NOT an independant entity. It is a REFLECTION of the commodity market. The September expiration is less than 4 weeks away. We may see a large correction. If we do, anyone in this market will get hammered. Anyone trading this market should take profits NOW and wait till expiration passes. Start buying the Jan SLV in or at the money calls the last week of August and HOLD THEM TO NEAR EXPIRATION. The fall rally is going to be huge.For the record, I LOVE the $40 calls. .....Happy trades my friend...........Chaz