"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 13 hours Is This The Death Of The iPhone X?
  • 14 hours Is London Still The Financial Capital Of The World?
  • 15 hours Is Gold Staging A Comeback?
  • 16 hours The $200 Million ‘Golden Parachute’ For Rupert Murdoch
  • 17 hours Bitcoin’s Breakout Is Not As Bullish As it Seems
  • 19 hours Farmers On Edge As Trade War Hits U.S. Grain Shipments
  • 21 hours Is Silver Poised For A Massive Break Out?
  • 2 days Meet The Hedge Fund Billionaires Club
  • 2 days The Next Housing Crisis Could Be Right Around The Corner
  • 2 days Cartel's, Pirates And Corruption Cost Mexico $1.6 Billion Per Year
  • 2 days Africa’s Fastest Growing Economy
  • 2 days The Blockchain Boom Hits The Utilities Sector
  • 2 days Why Smart Money Is Selling Off Right Before The Bell
  • 2 days Tech Giants Rally Ahead Of Earnings Reports
  • 3 days Global Debt Hits 225% Of GDP
  • 3 days The World’s First Trillionaire Will Be A Space Miner
  • 3 days How Student Debt Could Cause The Next Real Estate Crisis
  • 3 days This $550 Billion Industry Is Betting On Bitcoin
  • 3 days One Commodity Set To Soar On Russian Sanctions
  • 3 days China’s New Car-Market Rules

The EKG of A Bust

Since the violent breakdown in silver in May I have been doing a follow-up note about every two months on the long-term comparative study between the Nasdaq bubble and what I perceive as a burst bubble in silver.

My initial work stemmed from appraising the two seemingly disparate markets through the lens of a relative strength ratio, I deemed - the Relative Exuberance Ratio. Namely, it contrasted the Nasdaq/SPX market in 2000 and the Silver/Gold market up until late April of this year. The findings showed remarkably similar quantitative trends - with silver actually displaying an even more exuberant signal than the Nasdaq displayed in 2000.

NASDAQ versus Silver:Gold

Once the market pivoted, I extended the structural analogy with the Nasdaq on a long-term chart - with a few indicators overlaid to demonstrate the general momentum congruence of both markets.

From my last note in July:

The market pivoted with the analog in July and appears a whisper print away from 40. Should the market continue to follow script - it looks like the top of the range will come in around SLV 42 - after a shallow retracement ~ 40. I do not actively trade off of such a long term analog - perhaps I should be... Semantically Silver


Since my last follow-up I have taken my own advice and incorporated it into my weekly trading framework for silver. To a large degree it gave me confidence when the market falsely broke out in August and I held a trapped short position for several days. We now know that SLV broke back down after briefly flirting in the 42's and with significant bullish fanfare immediately extrapolating above 50.

I remain trading around silver with different strategies - because I firmly believed the next leg is approaching and will likely be filled with as much downside inertia as the break in May. Here is a compressed daily analog of silver to the 2000 Nasdaq market after the breakdown. As you can see from the hashed moving averages and the general performance range (coincidentally - just multiply SLV by 100 to equal the Nasdaq range) - both markets have trended quite similarly.

If this analog continues to replicate the emotions of a busted market in denial, it appears I will have to wait a bit longer for another test of the rebound highs - but not before SLV makes a quick trip down to ~ 36 over the next several sessions.

The EKG of A Bust


Back to homepage

Leave a comment

Leave a comment