Commodity Trader's Almanac 2O11

125

MAY SHORT SILVER CASE STUDY

The phrase “sell in May and go away” might resonate with stock traders, but it

can also apply to silver bugs. In the 2009 edition, we introduced the concept to

sell silver in mid-May. In the 2010 May Almanac on page 46 we stated, “Silver

sees a strong tendency to peak—look to sell silver on or about May 14 and hold

through June 25.”

The closing price on May 14, 2010 was 19.22 per ounce, and then by June

4th, the price had declined to a low of 17.37. If you look at the chart below, you

will see another example of how certain timing tools can be very instrumental in

helping to exit as well as to enter the market.

Not only did we have a Low Close Doji pattern form on the sell date, you

will also notice that the price of silver had traded at the predicted monthly Pivot

Point resistance. Last year I gave the foundation of what, how, and why

one should be using Pivot Point analysis on pages 6–9. In addition, I gave an

explanation of my proprietary candle patterns, the Low Close Doji formation

and the High Close Doji. Both of these concepts were first introduced in my

second book titled Candlestick and Pivot Point Trading Triggers: Setups for

Stock, Forex, and Futures Markets, John Wiley & Sons, 2007.

What has been effective for me as a trader is combining the reliability of seasonal

factors in supply and demand functions with timing tools such as these to maximize

entries ...