The ancients called the metal "tears of the moon," which is apt the way silver stocks ran away from cheapskate traders, including me, in the final hour today. SLW, PAAS, EXK, even SLV put on a show for bulls that left bears in tears. The interesting thing is it didn't make sense.
SLW 42.70 (after hours), +5.1%
PAAS 39.27 AH, +3.2%
EXK 7.47 AH, +4%
SLV 33.20 AH, +2%
Silver futures were spotty in that late run. That leaves a series of passionate blogs across North America about the impending doom facing Comex and JP Morgan, which allegedly have nothing close in physical silver to what has been doled out on paper. All "end game" scenarios and conspiracy theories aside, what does it mean for traders in SLW? Should they unload at the all-time high (now 42.57 after hours)? Or hang on through the drama and danger of a battle against the big boys? After all, if there is scarcely any physical metal in those vaults, SLV (ETF) holders could A) be in for a huge gain, or B) be left holding empty bags.
In case of an implosion, does anyone really think Uncle Sam would let JP Morgan get buried? Wouldn't the Fed bail "the Morgue" out, a la all the banksters in the financial/mortgage/subprime crisis?
So here's a look at silver futures. The close was strong, but strange.
Silver futures 5-minute chart
Today's trading in SLW. Smell like a short squeeze? I missed the 50% retracement of today's gain when shares went to 41.32.
SLW's gap up to an all-time high looks like SLV's chart two Friday's ago. That turned into a timely buy and positive trade for me.
SLW 1-year, breakout today
18 to 42 followed by a 50% retrace of the gain
down to 30 ... then another rocket ride up
It must say something about fear when I had so little of it during that SLV trade a week ago. Now I'll never trade SLV again, knowing the facade of its prospectus, the lack of physical silver to back it. I really like SLW ... but the newfound fear remains. It's healthy to an extent. I don't expect SLW to retrace (the new level is 41.66), but I may enter a half-position if it pulls back in after hours.
My favorites before the weekend remain hot: CRR, SLW, AAPL. I'm not convinced AAPL has enough fuel (catalysts) right now to continue this advance (354 is nearly a 5% gain from the recent low of 338). CRR got its boost from Cramer and is up 3.7% today (123.97 afterhours). SLW, up 4.7%, too hot at 42.55. It retraced once already today to a buyable level. It will do so again. Just a matter of patience.
Note on Silver Wheaton's earnings report, which was pushed back a day to Friday: Generally, positive reports are released early in the week. Not-so-positive late in the week. Doesn't mean that tendency applies to SLW, necessarily.
Caution is mandatory. I remain 100% cash.
Update, 10:21 pm (Hawaii). Silver futures are flat, but traded above 34 until the past 15 minutes. Trickeration or not, there is volatility that won't leave this metal. DJ, S&P 500 and Nasdaq futures are up, too. I'm still convinced that someone will pull the plug on this silver run, if only temporarily. I don't intend to be long when that happens, and my guess is that it will happen in the dark while most of America is asleep.