Tuesday, April 26, 2011

Teetering Tuesday

AMZN kookiness: earnings report reaction

10:42 am (Hawaii) Somewhere between today and tomorrow, bets will be placed. Educated guesses. Misinformed hunches. All that stuff. Somewhere, Spot Silver will re-establish 44-45 as support and launch into unmarked territory, price adjusted for inflation (1980 spot at $50 would be $138 today) or not. OR SPOT will wobble with any talk by Bernanke tomorrow about a stronger dollar, and plunge to 40. Those scenarios are okay with me, since I'm completely out. But those are just two possible scenarios. 

The market is skittish. Traders are as coiled to panic or exude bliss as ever. Look at AMZN, which traded up to 183, then down to 171 and back up to 184 within minutes after releasing its earnings report after the bell. 

Does this make any sense? I almost opened a small position at 172, taking the StockGuy22 approach to bounces after a selloff. I talked myself out of it, but the spectacle that followed was incredible nonetheless. That would've been a quick, sizable profit. But I'm not a big AMZN fan, so it didn't happen. (Being a fan should have nothing to do with a trade, but that's something I'm working on.) 

Spot Silver is trading above 45, and I don't know what time PM options expiry actually comes due today. If it's pegged to 45 as it appears, it's crunch time.

Update 11:06 am (Hawaii) Spot silver now at 45.50. Turd predicts a selloff before tomorrow's Bernakepalooza. Just watching for now.


Update 11:13 am (Hawaii) Though China is the driver of Spot Silver's rise, I can't help but wonder what happens as paper silver traders — who have been a big part of the metal's appeal and allure, just look at SLV move while miners flop — start to turn "fiat" into physical. Over time, as Spot rises, paper traders will opt for physical. That will add to demand, no question, but as physical silver/spot begins to behave like physical gold, in a sense — something to hoard and store away — the trading element that has driven this market short term will be diminished. That's one thing I can't help but wonder about. Of course, if China keeps buying and buying, paper trading will matter less and less. Or will it?

China vs. JP Morgan/Fed. It's the heavyweight battle of the year.

Update 12:05 pm (Hawaii) SLV stayed below 44 until a few minutes ago, when Globex reopened and Spot Silver remained above 45.50. Immediately, at 6 pm Eastern, Spot surged to 44.30 and has gone to 44.60 since. Currently, Spot is 45.65, which converts to 44.50 for SLV, and that's what's happened in the past minute. SLV has come back down and is trading at 44.47. This conversion has been consistent, with SLV trading at -2.5% to Spot.

Update 2:27 pm (Hawaii) Spot silver rose above 46 from 45.50 as Sydney opened. With Hong Kong opening, as well, if there's going to be an orderly bounce from the selloff low (from 49.81 to 44.80 or so), this would be the time. However, I agree with Turd Ferguson, who expects another takedown in the works overnight. I'd love to play silver via SLV if spot can get down to 44 or 43.50 or lower. Can't say I'm totally expecting it.

The market ran upward today as if to say, 'We expect Bernanke to leave things alone.' Which he could. But I'm content to stay out of the game 100% for now. A small position in silver would be okay, too, but I'm more leery here than I was over the weekend.

Update 2:56 pm (Hawaii) Sydney and HK are keeping Spot above 46. It was interesting to see SLV jack up above 45 earlier while Spot was at 46, meaning SLV was above the conversion level, running higher into the close of afterhours trading in the US. Momentum. The market has spoken and it believes whatever happens tomorrow is bullish for the market.

Whatever happens, China holds the trump cards, and that's good for gold and silver.


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