Silver has reached a key technical level

"Let the good times roll" is once again the motto of the stock market perma bulls as the Europeans graced the world financial markets with a gigantic sized punch bowl to help slake the thirst of the liquidity junkies. Mix in a dose of a better than expected US GDP number and it was "RISK ON" in a big way.

Silver, as expected when the risk trades are in full force, outperformed gold to the upside putting on nearly 6% against gold's 1.5% gain.

Note the chart and you can see that it has climbed exactly to the key Fibonacci 50% retracement level of its recent decline off the August high. It has also punched slightly above the 40 day moving average (dotted line) which a large number of fund traders monitor and is not far from the 50 day moving average.

If you recall the recent Commitment of Traders data, it showed a very low level of hedge funds on the net long side of this market, most of them having washed out over the past few months. If that crowd becomes convinced that the Europeans have effectively dealt with the sovereign debt crisis ( papering over the losses of the banks), they will pour money back into silver with a vengeance. Just take one look at what they have done to the copper and crude oil markets.

A push through today's session high puts silver on a path to make a run at $37.30 - $37.50.

Downside support is back near $33 followed by $32.50