Silver ETF - SLV Closes Above Resistance

Gold finally broke it's down trend yesterday and that's all it took to allow the silver ETF - SLV to close above the final resistance at $28. SLV is once again trading above the 10, 20, 50 and 200 day simple moving averages. In other words, the bull market is back.

About a week ago silver made an outside day key reversal and closed on the high of the day. That was the initial indication that silver had reached a selling climax. At the same time the Gold Stocks held support at the 200 day moving average. Silver had been trying to rally the past week but gold remained below the 10 day moving average (steep downtrend) so silver was having a hard time breaking out. Yesterday gold cleared both the 10 and 20 day moving averages as the Euro came under renewed pressure. This allowed silver to punch through the final moving average and close at the high of the day. Silver will often go back and test the breakout, so if that occurs and SLV can stay above $28 that would be a signal to traders that the uptrend is still intact.

Silver ETFs Finishing 2010 At Record Highs

It looks like all the Silver ETFs are going to push into the new year at all-time highs! Silver is trading at levels not seen in over 30 years and all the silver ETF contracts are making new record highs today.

Double Silver ETF - AGQ is up over 137% on the year.
The largest ETF - SLV is up almost 65.91% on the year.
SIVR is up 65.80% on the year as well.

Other less active silver funds like DBS and USV were up 65.10% and 64.45% respectively.

Closing the year at new all time highs bodes well for these markets in 2011 as well at least in the beginning of the year. Many market watchers including myself expect silver to explode to new all time highs ($50+) before this bull market is ultimately over. Whether that happens in 2011 remains to be seen.

It should be another interesting year!

Happy New Year!

Silver ETF Trend Remains Bullish

The short trade in silver using the double short silver etf - ZSL only netted $130 before the silver market found support. This market remains incredibly strong and can't even go through an overdue correction. After watching the action unfold last week I sold ZSL and purchased the silver mining etf - SIL which is the Global X Silver Miners.

The precious metals miners have been outperforming the metals since the rally began in August. During the credit crunch the miners fell much harder than metal prices so they still remain at a substantial discount to the metals on a historical basis. The following chart shows the large cap miners represented by GDX and you can see they have not made up the gap that was created during the decline in 2008. SIL didn't start trading until after the crash so that's why I used GDX for the illustration.

Taking Another Shot At ZSL - Short Silver ETF

The silver market blasted to another new high just over $30 per ounce and everyone is bullish so it's time to take a trade on the short side. The lowest risk way to do this is using the double short silver ETF - ZSL. It's so beaten down that I was able to buy it at $10.50 per share and I'm only going to risk it to today's low so it's a pretty small bet.

I don't think the ultimate top is in for silver, but this could easily be a short term top that will lead to a moderate correction. If you look at the chart below, you can see that the Relative Strength Indicator (RSI) failed to make a new high as the Silver ETF - SIVR went to new highs. This is called Divergence and is often a sign that the market is getting over bought and is due for a correction.



The largest Silver ETF - SLV stopped right at the psychological $30 level.

Brazil ETF Review - Putting The B In BRIC

The lead country in the emerging market BRIC community is Brazil. Rich in natural resources the Brazilian economy has been growing rapidly this past decade along with commodity prices.

The oldest and most established Brazil ETF is EWZ from iShares. As you can see from the chart below this ETF had a tremendous run from 2003-2008 then came crashing down with the rest of the global markets losing a whopping 70% only to turn around and regain much of that ground in 2009 rising as much as 150%. It's no wonder long term emerging markets investors have to develop nerves of steel in order to not get shaken out of their positions.



For the past year and a half there has been a better performing ETF available and this one is a small cap Brazil ETF that trades under the ticker symbol BRF. You can see by the chart below that BRF has been dramatically outperforming EWZ. When you think about it that makes sense because Small Caps normally outperform Large Caps following a recession. If this is true in developed nations, it's probably even more true for emerging countries. However, it will be interesting to see what happens to these Emerging Country small caps when the next financial crisis hits... I imagine it wont' be pretty.




There are several other newer Brazil ETFs as well, these include:

BRAQ - The Global X Brazil Consumer ETF

BRXX - A Brazil Infrastructure ETF

BRAZ - Global X Brazil Mid Cap ETF which focuses on mid-cap stocks.


The way things are going it's only a matter of time before Brazil will no longer be considered an Emerging Market. It seems to be developing at a rather fast pace!

Short Bond ETFs Spike Sharply Higher

Just yesterday long term bonds were rallying on a worsening European debt crisis but what a difference a day makes. Today all the Short Bond ETFs rallied sharply and closed with very strong gains as bond prices collapsed following the latest ADP jobs report.

Active Bond ETF Performance:

The Direxion 3x Leveraged Short Bond ETF - TMV closed up $2.51 or 6.36%

TBT the 2x Leveraged Short Bond ETF closed up $1.46 or 4.20%

TLT - the most actively traded Treasury Bond ETF closed down $2.51 or 2.56% on nearly twice the normal daily volume.

LQD - the investment grade corporate debt held up better losing only .61% as a stronger economy tends to reduce the risk premium between corporate bonds and government treasuries.

Municipal Bond ETF - MUB was down almost 1% ending a rebound rally from the $99 low set a couple weeks ago. It will be interesting to see if it can retest and successfully hold the old lows if the long term bond market continues to unravel.

Gold ETF Funds - Reviewed

With Gold near all time highs there is strong investor demand for all types of Gold ETF products. Initially during the first stages of a bull market people tend to favor the metal and large cap mining stocks.

The top Gold ETF Funds are: GLD, IAU and SGOL

The leading Gold Mining ETF is GDX

Then as speculative fever takes over investors (and especially traders) become more aggressive so they move into Leveraged Gold ETFs such as: DGP and UGL. They also move from the large cap gold stocks into the small cap or "Junior" mining stocks which tend to be much more volatile. The best ETF to capture the movement of these small cap miners is GDXJ which is only a year old but already trades over 2,200,000 shares per day on average.

During strong bull markets you will find that Silver generally outperforms gold as well just as the Nasdaq tends to outperform the S&P500 during strong stock market rallies.

Once the tide turns, which they always do then investors will be looking for ways to play the down side. There are several short gold etf products to choose from:

DGZ is the only one that is an unleveraged short gold etf.

UGL is a double short Gold ETF

DZZ is a double short Gold ETN

If you compare the performance of DZZ and UGL you will see they have very similar characteristics but the actual contract risk in a time of crisis may differ. Some pundits say that ETNs have more contractual risk because of the way they are structured.

Palladium ETF Still Top Performer For 2010

Despite the strong rally in silver recently the Palladium ETF remains the top performer since it's inception last January. Up over 60% it has been trading in lock step with SLV lately but still maintains a 10% lead in overall performance this year.



The Platinum ETF remains the weakest of the metal complex barely showing a gain at all since it's inception on the same day as palladium. Platinum was apparently over priced in relation to the other metals and those who have been buying the weakest precious metal hoping for a catch up rally have been disappointed thus far. If this precious metal rally continues from here however, there is little doubt that Platinum should participate going forward.

Another Big Day For Silver ETFs

The Silver ETF - SLV closed up 89 cents (3.35%) after being up over $1 earlier in the day. In the past few days SLV had retested the 20 day simple moving average and again found support at that level. These $1+ moves are something that metals traders haven't seen in many years but are becoming increasingly common as this bull market wears on.



Junior Gold Stocks - GDXJ was the second strongest non-leveraged ETF up 2.72%

The Silver Miners - SIL was up 1.95% on the day

The Gold ETF - GLD was up 1.42% while the Gold Mining ETF - GDX was up only 1.07%

The Double Silver ETF - AGQ was once again the superstar up a whopping 6.65% today and nearly 120% since the rally began the 3rd week of August.

Junior Gold ETF Continues To Outperform

Ever since the break out in late August the Junior Gold ETF - GDXJ has been strongly outperforming the Gold ETF - GLD. Since inception GDXJ is up about 62% versus a 25% rise in gold over the same period of time (since Nov 2009).

Junior gold stocks tend to perform best after a well established uptrend has already taken place in physical gold prices so many are looking for this out performance to continue for some time. They are extremely volatile however so even though they tend to outperform on the upside they normally under-perform when the market turns south so caution is in order. Since individual companies tend to be risky this explains why the Junior Mining ETF has been so popular, it's an easy way to diversify. Average daily volume has been running in excess of 2.2 million shares so that's incredibly strong for a Gold Mining ETF that's only a year old. It wasn't too long ago that investors would laugh when you mentioned mining stocks.

Here is the price chart for GDXJ since inception: