The silver markets had a very neutral day in reaction to the testimony given by the Federal Reserve Chairman in front of the U.S. Congress. While he didn’t go out and explicitly suggest that quantitative easing is coming anytime soon, it certainly didn’t rule it out either. In a sense, he gave both the bears and bulls what they wanted at the end of the day. While he didn’t signal easing right away, he also mentioned that the Federal Reserve does have a few tools left in its tool bag in which to accommodate economic expansion. Because of this, this is a perception challenge for most traders, as it looks like it’s possible for easing, but we really didn’t learn much at the end of the session.
Since we can’t learn much, it makes sense that the market ended up basically unchanged, and as a result we still think silver is pretty much as short-term scalpers market at best. A break above the $30 level would be massively bullish, and have us buying and holding this metal. On the other hand of course, a break down below the $25 level has is massively short of the silver markets as it would show a serious swing in momentum. In the meantime, we only see very short-term setups and recognize that there are much easier markets to trade at the moment.