Silver's Inconsistent Signs
Over the past couple of sessions, there have been some notable moves in silver, which seems like it should be a good sign for the metal going forward. There was heavy selling to end the week, then a reversal from a low on Monday. That often signals exhausted selling pressure.
Unfortunately, it hasn't been so easy for silver. Prior times when it behaved like this, it led to inconsistent results, even a bit weaker than average on some time frames.
In the coming days, we'll be rolling out a private Twitter feed for premium users, which is an excellent platform for much of what we look at during the day, as opposed to longer-form posts that clog up your email inbox. We should be able to give full details on how to access the feed on Tuesday or Wednesday.
As part of fleshing that out, we posted a couple of studies related to the move in silver, which show just how inconsistent it's been when exhibiting potential signs of selling exhaustion.
One good sign is that money managers have been giving up on it, so that their proportion of long to short positions is near the lowest levels in several years.
That's one of the few bright spots, though. Even Monday's reversal isn't very intriguing. Other times it reversed from a low, it once again led to wildly different results. That's not what we look for when trying to find an edge.
Silver has had a better chance at bottoming when our Optimism Index is below 30 and we're not quite there yet (it closed at 36 on Friday). If it keeps falling in the coming weeks and starts to trigger more signs of excessive pessimism, we'd probably see more consistent signals of exhausted selling pressure than we're seeing now.