Nov 21st 2019, Silver Chartbook: Sentiment silence and lies

Sentiment, silence and lies

We spoke in our last silver chartbook about how to take a contrarian position. As well we explained how to bet against consensus. Sentiment is one aspect supporting a contrarian trader. This is obviously necessary to achieve a “buy low, sell high” approach… Selling when media is in exuberance of extremely good news. Consequently buying when there is doomsday mood in public opinion. There is more though to read sentiment. We would like to focus on the less obvious parts of this edge today. Sentiment, silence and lies.

A bit harder to spot is the absence of sentiment. “Media silence” in itself is a warning signal for the astute trader. The market is often in need for a stimulus when looking for direction. In the past only the ones “in the know” were able to place their bets ahead of time. However, for the savvy investor social media has opened a way to read about events abroad when main stream media is still suppressing news that might not be beneficial to its economy or political agenda.

Lies

…are a bit harder to spot. It is easy to identify them when your neighbor tells you over and over again how often he goes to the gym, and how well he is off. You can guess that he most likely is at the bar and scrambles to make his credit card payments. It is quite different though, when in a time of crisis while people are looking for security and guidance, one has to doubt media, presidents and alike. Looking back through history, unfortunately there is a common trail that policy makers prior to currency devaluations have given great assurances for these events not to take place. This in the midst of precious metal prices rising which was attributed to pure manipulation of speculators. Truth to be told nothing but government manipulation at its finest.

Once the silence is broken and the cat is out of the bag, a long trail of lies often follows. This at times where individuals are longing most for security and support. It is the reoccurring sequence of events identified, that make the sentiment trader independent of this media misinformation.

Monthly chart, silver/US Dollar 11/20/2019, “fence trading” :

Silver in US Dollar, monthly chart as of November 20th 2019

Alternating red and green bars (yellow circle = fence trading) on the monthly chart show a directionless market seeking out for sentiment. A catalyst is needed for the market to break a range or a triangle. With support (green horizontal line), a break to the upside is more likely.

Silver, weekly chart, 11/20/2019, “highest probability: sideways”:

Silver in US Dollar, weekly chart as of November 20th 2019

The weekly chart confirms the highest probability, without news events, to be sideways action. A double bottom formed at recent lows near the 200 simple moving average (purple line), would be a first sign of a possible low risk entry point.

Silver in US-Dollar, Sentiment, silence and lies, November 20th 2019, daily chart, “symmetrical harmony”:

Silver in US Dollar, daily chart as of November 20th 2019

The daily chart gives a reflection of who is mainly trading silver. Charts are like a heartbeat of a patient. Compare crypto, penny stock, commodity, currency, bond, futures charts and you will find a special imprint in each of these various markets. The symmetrical harmony is typical for the silver traders. Yet another way to identify edges of the sentiment of a specific type of group of traders.

Sentiment, silence and lies

In our telegram channel we post news items in real time that we find sensible to identify sentiment edges ahead of the crowd. It is the stacking of odds, that allows us our low risk approach. While many jump into action in a reactionary way when prices start to move and the crowd has found its common denominator, we aim to be already positioned and rather use the crowds provided liquidity to take first profits and reduce our market risk.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.

About the Author: Korbinian Koller

Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.