For many weeks we have been waiting patiently, like vultures perched on the branches of trees, for the Large Specs to go belly up and croak, and the good news is that they just have, so it’s time for us to swoop down and feast on the carcasses, the carcasses being silver and the better silver stocks, which are at good prices here, and although they have already started rallying over the past week or two, the COT structure is now much healthier, suggesting that they will continue to advance.
On the 6-month silver chart we can see the breakdown from a Symmetrical triangle that occurred late in November leading to a drop well into December, and also how silver has slowly recovered over the past 2 weeks. In itself this chart looks bearish, with a breakdown followed by a rally back up towards resistance, and moving averages in unfavorable alignment, and it is only when we consider the latest COTs and then look at long-term charts that we realize that the setup is a lot more bullish than it looks at first sight on this 6-month chart.
Next we will look at a 18-month silver chart, the main reason being so that we can compare the peaks and troughs on it directly to the 1-year COT chart placed below it. On this chart we can see that the silver price is within the confines of a large gently downsloping trading range bounded by approx. $15.25 on the downside and $18.50 on the upside. This chart makes clear why it turned up where it did a couple of weeks ago – it had arrived at a zone of support towards its July lows.