- Silver surged on Wednesday with gains toward $54, but fading volume raises concerns about conviction behind the move.
- Holiday-thinned trading increases uncertainty, leaving key levels at $55 and $50 crucial for determining direction.
Silver has exploded to the upside during the trading session here on Wednesday in what might be considered somewhat normal volume. It is a little lower than usual, but what I’m really watching here is that we are pressing this $54 level yet again, but the volume just isn’t picking up. This does not suggest to me that there’s a lot of really big money behind this. I could be wrong. There is such a thing as divergence, but divergence doesn’t necessarily mean there has to be a sell-off. But I would feel better about this if volume was picking up; it would show real conviction. And in fact, the two times that we’ve seen real conviction in this general vicinity have been to the downside.
Holiday Liquidity and Market Behavior
That doesn’t mean that I’m bearish on silver. It’s just that something isn’t quite right. Keep in mind, Thursday is Thanksgiving, so that, of course, will have a major influence on the silver market. There will be some after-hours type of trading here and there, but the main session itself will be closed as the Americans won’t be involved. Friday is very likely to be thin as well, because, quite frankly, most Americans just don’t go back to work on Friday after Thanksgiving.
So, the next couple of days with a lack of volume could have huge moves. We just don’t really know in which direction. I mean, at this moment, it looks like it’s to the upside, and that’s very well possible, but I don’t like low volume, big moves as we’ve seen during the trading session on Wednesday.
For all we know, some of this could simply be people who had been short for the last week or two and don’t want to be short over a holiday and then find themselves on the bad side of a limit-up day. So, we’ll just have to wait and see. Short-term pullbacks should be thought of as buying opportunities. But again, I want to see the volume start to pick up. It’s not bad. It’s just getting less and less, which makes me a little nervous. If we can clear $55, then I think silver has much further to go. However, if we break $50 again, that is going to put some pressure on this market.
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