Futures Roundup

Banks Continue Pumping Liquidity, Silver Shines

   Fundamentals
Silver futures have been riding high on the expectations that central banks will remain fast and loose with their monetary policy. China, in particular, has been a focus of metal traders, as there is hope that some of the recent People's Bank of China activity may have stimulated manufacturing activity. Manufacturing data from China will be released this Thursday. The brisk pace at which Silver and Copper have moved higher indicates that some traders are not expecting a contraction in manufacturing activity. The blank check that the Fed has written has led to a freefall in the exchange rate of the US Dollar versus the major currencies, which has added fuel to the fire. There have been no major developments in the EU sovereign debt crisis, but the situation remains positive for holders of precious metals.

   Technical Notes
Turning to the chart, we see the December Silver contract rising well over $6 in the span of a month. Prices have moved through resistance at 32.50 and 34.15 without as much as a hiccup. The next upside target may be the spike high near 37.50.

The sharp rise in prices has resulted in the RSI becoming overbought. The RSI has been moving sideways with prices rising. This divergence between prices and the RSI indicator suggests prices could weaken.

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About Mike Zarembski

Born in the grain pits of the Mid-America Commodity Exchange (MidAm) in the early 1990s, Mike's futures career soon shifted to the offices of TD Waterhouse in 1999, followed by Xpresstrade in 2002 and eventually optionsXpress in 2007.