In watching silver move up towards $44 in today's session, I am struck by the huge amount of air pockets above this market. Based on the manner in which is it moving up, there are simply not enough offers. I get the sense that would-be shorts in silver are terrified to step in front of this market. The dearth of sellers is allowing small bids to take the price up in big steps.
Coming on the heels of what was a huge volume day yesterday, I am a bit concerned about this. Right now it seems to be more a case of fewer sellers than it is a case of more buyers. I want to see the metal clear $44 and hold that level to feel a bit more comfortable about this and I want to see the volume pick up some. This market has come a long way and will need to see plenty of buyers even at these levels to keep it moving steadily upward.
A pause in the move would actually be healthy at this point. It could be that some of the shares are sensing this are a reluctant to jump higher waiting to see if the metal will pause and set back a bit or gather further momentum and just head to $50. Should the latter occur, we will see a rash of short covering in the silver mining shares.
Let's see how the metal fares the remainder of the trading day. If it clears $44, the volume should pick up.
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