The iShares Siver Trust (SLV - commentary - Trade Now) ETF is up over 5% today, with the help of a big surge in volume. The index is now well into new high territory after taking out multiweek October highs near $17.60. The SLV began the day with a powerful breakaway gap higher open and has continued to work higher throughout the day. Volume is running near double the index's daily average and will close out the day as one of the heaviest positive days this year. That's quite impressive considering that the SLV has gained 50% since the July lows and is still attracting a great deal of interest.
SLV Daily (NYSE) iShares Silver Trust
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The setup for the SLV's big upside move today began earlier this month. A few days after finding support near the $16.00 area, the index put in consecutive high-volume positive days. This sharp jump in trade lifted the stock back above its 50-day moving average and quickly reversed a steep 10% three-day slide. The next week and a half of action was very unexciting as the SLV chopped around just below $17.00 area. Now that this area has been cleared, it will serve as strong support in the coming months. I expect the $17.50 area to hold as the index continues to work higher through year-end. I expect the SLV to eventually reach the $19.00 area during this run. A rally up to this area would re-test the index's highs from last summer.
P.S. Will you be there when Cramer makes his next move?
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At the time of publication, Morrow was long SLV.
Gary Morrow is president of Yosemite Asset Management, LLC, a registered investment advisory firm in San Luis Obispo, Calif. He manages individual accounts through Charles Schwab and runs a long/short hedge fund. Prior to forming Yosemite, Morrow spent 12 years on the floor of the Chicago Mercantile Exchange trading foreign currency and interest rate futures. He holds a bachelor's degree in economics from Ripon College.
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