Silver Breaks Out to Close Over $30 & How I Am Trading this Move

Update - Dec 30, 3:40 AM EST:  No, I'm not nuts nor an insomniac.  Still posting from Europe this week where the market has been open in Germany for the past 40 minutes or so, and I wanted to provide a status update to what I wrote about below in yesterday's post.  Though the thugs at JPM did come in and try to take down the silver market at around 8:20 AM EST (yesterday), the silver bulls fought back and brought us back up close to the early December highs at $30.70, where we hovered for most of the day.  Fearing a big correction, I did end up taking 40% of my position in SLV Feb $32 calls off the table at a tidy 90% profit, leaving 60% in play should we get a further rise.  That looks to be the case right now, as silver started really catching a bid at the Europe open....putting in a new high of $30.88 just a few moments ago.  It's at times like these where I wish I didn't make the conservative move yesterday, but I'm still concerned that the manipulators will make one more serious raid on price before allowing us to cross into the $31's, so I'll be watching and waiting.

Here's a shot of the overnight action in Asia (5 minute candles), where price rose slowly and steadily throughout the session, and then the big pick-up when Europe opened. 

 Yesterday's original post starts below the line.  Good luck - SM.
 ______________________________________________________________

Silver has finally broken out of the bullish pennant that had been forming since price last broke over the $30 threshold, but we have yet to take out the intra-day high posted earlier this month at $30.70.

So has the next leg-up in the silver rally begun, or are the manipulators getting ready to stomp us back down?  I think the chances are 50-50 for both alternatives, but in the case of the latter, I would see support at $29.50 as another buying opportunity.  As mentioned in my last post, silver will continue to rise, as will most all other commodities....this outcome is virtually inevitable in the face of  Bernanke's current plans to continue printing money to seemingly infinity. 

A Long Over Due Update on Silver

For anyone who has been in silver for the past six months, you are currently riding quite the profit wave, so the Silver Surfer image to the left seemed somewhat appropriate as we proceed into the last two weeks of 2010.  The question, as usual, is what happens next?  Does the wave come crashing down, or does it continue to grow and develop momentum as it heads toward shore, ideally forming the perfect barrel that seems to stretch forever, providing those who caught it, the ride of a life time?  My money is still on the latter, quite literally, in fact.  Step inside for a recap, and decide for yourself.

A Brief Recap And A Good Laugh

The past few days have been pretty busy here at my day job, and with the holiday season upon us, my evenings have been more event-filled than they typically are during the week.  Needless to say, I haven't had as much time as I would've preferred to comment on the latest happenings in the markets and the economy...in fact, my time right now is also very limited, so inside, I'll give a quick run-down on the Euro, Silver and the overall markets, then finish up with a "must watch" video clip that will leave you chuckling...I promise.

2nd Week of December....Has a Santa Claus Rally Begun?

It's Sunday evening here in the States and the markets have already opened in Asia.  The Euro is currently trading higher against most major currencies, the Aussie Dollar and USD are both trading higher against the Yen, while silver continues to make new highs ($29.50 while I type) and gold remains over $1,400 as it positions itself for a run at new highs this week.  Nothing new or of any significance this weekend out of the Eurozone, and it looks like tensions in Korea have eased for the moment as the world press focuses on Wikileaks, and its founder, Julian Assange.  Meanwhile, 60 Minutes has just aired the latest interview with Federal Reserve chief, Ben Berananke.  I watched this interview and have a number of things to say, but I'll save that for a post later on in the week when the video is available to post as well. 

Despite a very negative turn on the unemployment front last week, Friday saw the markets all end on an up-note and very close to the 2010 highs, as day after day of $7 billion POMOs and hints of even more easing (dare we call it QE3?) hit the rumor mill and contribute to the "hopium" built rally.  So do we rally on into the end of the year, or are we heading for a fall?  With all of the global events influencing the markets, is it even fair to pose this question in such simple terms?  I'm not sure either, but I'll lay out what I'm seeing, and let you make up your own mind.

Look Out - Silver Could Go Parabolic Within Weeks

It's Saturday evening and I've spent the past several hours watching college football while catching up on the latest posts at my favorite blog sites.  On the football front, Auburn and Oregon have both claimed their spots at the BCS National Championship Game later in January, and Nebraska is tied with Oklahoma 17 - 17 in the second quarter of the Big 12 Championship game.  Even though my team, Southern Cal (USC), is under NCAA sanction this year (and next), I'm still a huge fan of college football, but I gotta tell you folks....I've been having a hard time concentrating on today's games, as the action in silver over the past two days has easily eclipsed the excitement on the field.   After everything I've read today, my $100/oz price might turn out to be too conservative by a factor of 5 or more.

A Look at Tesla Motors

For those of you out there who have never heard of Tesla Motors, they are a manufacturer of high-end electric cars.  You can take a gander at their website here if you're curious.  My interest in Tesla began earlier this year when they had their IPO on the NASDAQ.  It was touted pretty highly in the financial media, and in the first few weeks of trading, had a lot of volatility, making for good day trading.  When the price dropped below the original IPO price of $17 (bottoming out at $14.98), a really good friend of mine told me that he was going to buy the stock as a longer term investment, and suggested I do the same.   Normally, I don't buy and hold anything for very long, but I sure wish I would've heeded his advice this time.  Anyone who bought at a price under $18 has seen a 100% profit since summer time, with the stock hitting a high of $36 last week, and still trading over $32 now, though the past couple of days have seen some heavy selling, which is likely a dose of profit taking for those who were in since July/August.  The question now - are we seeing an opportunity to buy the dip, or should we be going short??

Obviously the Euro went Bungee Jumping, not Cliff Diving

Wow....I turn my back and concentrate on my day job for a few hours, and look what happens.  Complete reversal of the sell-off from this morning, and then some.  No time to investigate any further, but anyone day-trading the EUR/USD pair today could've made a killing going both ways.

The Euro - Going Cliff Diving Again....

The market has been waiting all week to hear what ECB president Trichet would have to say this morning regarding the potential for a Paulson-style monetization of European debt.  The rumor mill was tossing around the potential for a trillion Euro + bailout...

....and this still may be in the cards at a future date, but as for today, no mention whatsoever, and the Euro is getting jack-hammered as a result.

Mid-Week Update

It's been an interesting week thus far in some markets, and rather ho-hum in others.  The the funniest bit of commentary I came across was from one of the posts at zerohedge, saying something to the effect, "If you were long the Euro and short Gold, you were likely carted out feet first after these past few days".  How true.  I can't find the link now, but I'll post it if I do.  At any rate, the Forex markets have seen a lot of action, as have the precious metals, while the S&P remains range-bound between 1173 and 1200 as the bulls and bears fight it out.  Actually, I think it's more like the Fed fighting gravity, but hey...that's just me.  Charts and commentary below....