Silver? Small mining companies or "juniors"? Platinum? The dollar? These are some of the indicators that "gold bugs" watch to judge whether a gold rally has staying power. Let's check out the charts of the silver iShares Silver Trust ETF (SLV) today.
In this daily bar chart of SLV, below, we can see that prices made a bottom back in September-November, followed by a rally into February and a retest in May. This month saw SLV rally above the rising 50-day moving average line as well as the now bullish 200-day line.
Notice the rising On-Balance-Volume (OBV) line from November to June? Buyers of SLV were being more aggressive even as stocks soared and the dollar rallied.
The trend following Moving Average Convergence Divergence (MACD) oscillator turned up above the zero line in December and again this month.
In this weekly bar chart of the SLV, below, we can see a longer-term decline. A pattern of lower lows and lower highs can be seen until May when prices made a higher lower.
SLV needs to rally to make a higher high above $15.25 to establish and uptrend. Prices are now above the bottoming 40-week moving average line.
The weekly OBV line shows some recent improvement and the MACD oscillator is just below the zero line - a rally should be able to generate a buy signal.
In this Point and Figure chart of SLV, below, we can see that a trade at $15.30 will be a new high for the move up and a bullish development.
Bottom line strategy: The charts of SLV have improved but they lag behind the action in gold. Experienced traders could go long SLV on strength above $14.50 and $15.30. Risk to $13.75.