Silver and gold ETF charts are presented below, with their respective 50, 100, 150, and 200-day moving averages (DMA). The 50=yellow, 100=blue, 150=purple, and the gray=200…some argue that these figures are completely arbitrary, but they have perhaps become a self-fulfilling prophecy, for the market does indeed respect them. These setups of interest in the GLD and SLV include trend-line support and moving average support.

First off in the SLV, the market seems to be coming into the 100 DMA at around $31.00. At last check, the market is a mere $0.17 away from this level. The $31.00 level also connects to three prior support levels via a trend-line. The GLD is appropriately seeing a similar picture, however without the key 100-DMA. The trend-line in GLD has similar prior touches, but the upward momentum is not confirmed with price staying above the 100 DMA. Perhaps a pair trade could be advised here, getting long the SLV and short the GLD, aka long the better looking chart and short the mediocre chart. A pair trade involves properly sizing the appropriate amount of shares to the same dollar amount.

One should note that the SLV has massive open interest in the soon to expire December options. The $32.00 December line, that expires this week, has over 45,000 contracts open and may act like a magnet; helping the pair trade.

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to… Author salernoma@mx.lakeforest.edu

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