"As the euro rips higher today after comments by Jean-Claud Trichet and
the newly proposed bailout measures firm the struggling euro-zone, it would
be wise to watch silver as a proxy for the currency markets. Since silver
broke its parabolic formation over a month ago, both markets have been trading
with great correlation - with silver leading the way by several sessions.
This makes natural sense in the fact that silver is a much shallower and
more impressionable market that will trade with greater nuance to the underlying
market conditions. Jawboning by the ECB appears to be only momentarily supporting
the euro. I would expect the euro to follow suit lower over the next several
sessions.
The fact that silver failed to take out the early May dead-cat-bounce highs
indicates that the mid May lows will at the very least be tested and likely
broken. The violent reversal in silver yesterday gives credibility towards
that expectation."
From my perspective, silver appears to be simply consolidating into its next
move which will very likely be lower - considerably lower. The dollar continues
to exhibit strong congruency to the early 1980's bottom.
Although I am an active trader, I have always taken a broad perspective when
approaching the markets. I respect the Big Picture and attempt to place each
piece of information within its appropriate context and timeframe. I have found
that without this approach, there is very little understanding of ones expectations
in the market and an endless potential for risk.
I am not a stock picker - but trade the broader market itself in varying timeframes.
I want to know which way the prevailing wind is blowing, where the doldrums
can be expected and where the shoals will likely rise. I will not claim to
know which vessel is the fastest or most comfortable for passage - but I can
read the charts and know the risks.
I am not a salesperson for the market and its many wares. I observe it, contextualize
its moving parts - both visible and discrete - and interpret.
I practice Market Anthropology - Welcome to my notes.
Erik Swarts is not a registered investment advisor. Under no circumstances
should any content be used or interpreted as a recommendation for any investment,
trade or approach to the markets. Trading and investing can be hazardous to
your wealth. Any investment decisions must in all cases be made by the reader
or by his or her registered investment advisor. This is strictly for educational
and informational purposes only. All opinions expressed by Mr. Swarts are subject
to change without notice, and the reader should always obtain current information
and perform their own due diligence before making any investment or trading
decision.
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