Silver shines in ETF purchases

Market Pulse: October 1

I read last week that silver ETFs added a whopping 717 metric tons of silver to their holdings last quarter. Of those, SLV is the largest with about 9,742 metric tons. Total silver holdings for all exchange-traded funds (ETFs) are just 2.9% below the record high of 18,639 metric tons reached in April 2011 when silver hit a high of $49.820 per ounce. And take a gander at how big money started changing to a bullish posture back in early 2011.

December 2012 silver opened last week at $34.520 and closed the week at $34.577. A close above $35 and the next stop very well could be $40, possibly with a pullback before it gets there. 

Looking at the daily chart, you can see how over the past two weeks ADX dropped from 60 all the way down to 26.5, reflecting a large drop in strength of trend. It almost looks as if silver exhaled and is preparing to take another deep breath up. You can see how DI+ has now crossed over DI- and is rising. MACD over the past two weeks dropped below the signal line adding a small amount of divergence, and Stochastics corrected from overbought territory, but are once again overbought. Keep an eye on ADX. (A number of you have asked about the ADX I use, it is a modified ADX so you will not be able to recreate this on Trade Station or any other programs.)

Proceed to Page 2 for the latest COT Data...

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