Silver Lesson

Trade Ideas for the Active Investor

Silver is providing a great lesson for investors, traders and farmers.

DON’T CHASE THE MARKET

Buddy wanted to buy silver on Monday at 109.81.

He reads ZeroHedge and such, so the headlines were bullish, and it is easy to get caught up in the hype.

But generally, the headlines and magazine covers mark the end.

I suggested it was foolish to chase it for the following reasons.

1. The chart is extended

2. RSI’s are high.

3. RSI divergence

For a few days, it was the wrong idea, but I have seen how parabolic moves like this, short squeezes like this, end.

And they end quickly.

Silver is down 33% for the day.

Will it stay there?

Who knows.

But it is difficult to manage risk in a parabolic move.