Silver Bottom And Dow Top: News For Media Lovers

March 9, 2015

The March 1, 2015 article argued that silver has seen its low and that the Dow could still blow-off to 19,700.

While all of the charts and their respective indicators suggested a low was in place, I pointed out that, ideally, silver could put in a bullish divergence in its daily slow stochastic to suggest an intra-month low, though no such event was necessary to form a higher low.

Today, we indeed do see that divergence in the 1-year daily iShares Silver Trust (ARCA:SLV) chart versus the low of late February. If the slow stochastic crosses above 20 (below price chart), we will have an outright short term buy signal.

Moreover, the SLV did do it 'meaningless' test of the $15 level ($15.10, before closing at $15.21).

Last week: "It is in no way necessary for all of the indicators to line up, but if they were to do so, including a positive divergence in the daily chart (included above), silver would retest the $15-level again before resuming the advance. (But would that matter anyway?)"

1-Year SLV Daily Chart

As for the Dow, we understandably see the inverse, as the slow stochastic has rolled over from its divergent high versus late February.

However, the speed with which the stochastic is plummeting is typical of a recovery before a true breakdown, so I err here on the side of patience (as per the concerns expressed last week and reiterated in the first paragraph above).

1-Year DJI Daily Chart


Today's news is the presumed cause, namely, data pointing to a stronger economy that could lead to sooner-than-expected rate increases.

I will not discuss the merit of that analysis in today's update, whatever my thoughts on the matter may be. Rather, I want to look at what's REALLY important.

We have seen precious metals rally on news that previously caused them to decline. This is just an example. Over time, one sees thousands such examples, as I have over the past 33 years.

This is a common aspect of the markets, largely because reporters and those who are their clued-out sources provide these explanations since they need something to say.

Often, those sources are serving someone's agenda and playing the media for fools (a major player, perhaps?).

The preceding falls under the category of technical analysis and, specifically, the underlying aspects of contrarianism.

However, further discussion of these points would cross over into some kind of beginner's course.


Courtesy of

Man has had the ability to separate silver from lead for as far back as 4000 B.C.