Should trade up to 22.40 or down to 21.50 with silver at 19.59. SLW is still trading very weak to silver and giving up ground today. At some point today we should break to a larger range. I'm looking to sell up near 22.40 or buy down near 21.50.
Shorting some silver here at 19.60. Silver is outperforming SLW here. SLW calls are being sold, so the market is betting that silver comes back down as SLW is demanding no premium currently over bullion. If an uptrend in the metals in believed to be in progress, the miners should outpace. I see shorting of the miners and buying in the metals, which usually is funds positioning for a hedged move down in the metals with the miners outperforming to the downside. This has been the trend for a while and silver will have to lead the way out. Until we close above 19.80, I see shorting continue in the pops in SLW. It is easier to short silver while it is expensive than try to pick a turn in the trend of the spread. Any further move higher in silver will trigger a 5% up day in SLW to move out of discount and into premium to play catch up. Locking in expensive silver here and you can buy the short attacks in SLW and lock in a good discount on the stream. With calls being sold and the vix in retreat, call options are cheaper than the stock. Since calls are being sold with the vix down and SLW trading cheap, I assume the call selling is retail as it would make more sense and be cheaper to sell the stock than to sell calls to reduce delta. This could create a perfect opportunity for SLW to move higher and the weak longs to lose stock to the cheap call buyers in the June contract. A lot of structure lining up for a move higher in SLW, but you can make either way by shorting silver out here.
I listened in on the conference call to the shareholders meeting on Friday. SLW was very positive on the Pascua-Lama project getting through its hurdles soon and back on track. This would be a huge catalyst coming soon. Short interest started to pick back up the last two weeks of April as well, so hopefully that continues. Fundamentally, things are starting to pick up and share structure is beginning to re-allign for a more consistent bid.