Open interest continues to decline as the weak hands are flushed (see chart below). This action is consistent with paper operations in which the weak hands are flushed in an environment of headline fear.
Silver London P.M Fixed and the COT Futures and Options Open Interest Stochastic Weighted Average
Accumulation by strong hands has achieved statistical concentration. Statistical concentration tends to precede tradable bottoms (see chart below).
Silver London P.M Fixed and the Silver Diffusion Index (DI)
The only hitch in the setup at this point is retail money. Retail money with its tendency to be concentrated on the wrong side of the trade near inflection points remains relatively neutral as of June 7th (see chart below). Short side concentration by retail money would galvanize the bullish setup. Watch for it in the coming weeks.
Silver London P.M Fixed and the Commercial (C) & Nonreportables (NR) Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest
Silver’s next move has the potential to be “shock and awe”. Smart money is buying long contracts hand over fist. This type of concentrated buying has not been seen since late 2008 (see chart below). The concentrated buying of 2008 foreshadowed nearly a doubling and quadrupling in price by early 2009 and 2011. In other words, the money flow setup foreshadowed a ‘shock and awe’ run that few experts saw coming.
Silver London P.M Fixed and the Commercial Traders COT Futures and Options ZScore Weighted Average of Long & Short As A % of Open Interest
