$$ SLV Range Contraction

SLV's VWAP for five of the last seven days including the last four are contained within the range of $34.08 to $34.22:

5/13 = 34.15

5/16 = 33.62

5/17 = 32.69

5/18 = 34.22

5/19 = 34.17

5/20 = 34.08

5/23 = 34.14

Volume has been elevated recently, so that's a couple hundred million shares traded at an average price of ~$34.15 the last four days.

To me, this is classic range contraction which usually is a prelude to range expansion, i.e., a big price move.  While I would not be surprised to see SLV push upwards from here into the high 30s/low 40s, it could break either way.  

A straddle might be profitable, but the premiums are still pretty high after the recent silver crash due to increased implied volatility.  Today you could have bought a June 34 call and a June 34 put for ~$3.25 total, so you profit if SLV reaches higher than $37.25 or lower than $30.75 between now and June 17.

$$ Current Thoughts

Please excuse my absence.  I've been working hard with Terry, and we have some exciting new things happening!

Most of the major markets (S&P, Dow, Nasdaq, Russell, Gold, Bonds) are obeying the RSI range rules for up trends.  In up trends, the RSI floor is 38-40.  If the RSI has been at 40+ for awhile and then you break below 38-40, that's a sign you have started a downtrend.

In downtrends, the RSI ceiling is 60-62.  If the RSI has been below 60 for awhile and you break that to the upside, then the odds are you have started an up trend.

On most of the major markets (except Silver), the last major RSI event was a break above 60.  Silver's RSI broke below 40 on the recent crash that I warned about here.

From a cycles perspective (many of which I have written about at www.TTheory.com), it would not surprise me to see the ongoing equity/gold market corrections end over the next day or two, then we see upward movements in price into ~June 2, and then a fairly sizable correction into early July.