03/04/2014 10:01am CST
After aggressive strength rallying in the silver market has brought multi month highs, the May silver market has come into weakness recently. All hope is not lost on this with this week's low of 21040 and last week's low of 21025 setting up as a potential double bottom. A double bottom creates stronger support on the market to hold in order to continue upward strength. In this case, if the 21025 low can hold this market could be setting up for another leg higher. From the high of August at 24780 the 38.2% retracement also sits at this level, creating a more complex story for the resuming silver bull.
Yesterday, most of the eurozone, UK and the US released their manufacturing data. The information was mixed with most of the numbers lower than the previous month, but still above 50 which indicated expansion. China, however, had another bad month with the HSBC manufacturing PMI reporting 48.5, one of the lowest prints since July. This economic information in the US has been mostly mixed with most of the poor information being blamed on the unseasonably bad weather. The FOMC continues to hold their stance that the economy has been improving and we're just hitting a rough patch. With the weather continuing to be poor and most of the recent economic information blamed on such tomorrow's ADP and Friday's non-farm payrolls might be difficult to get a good gauge if we're seeing weather follow through, or if employment continues to slow. The Beige book tomorrow will help gauge if the FOMC sentiment has actually changed since the previous meeting. Continued slowdown, weather related or not, could still indicate strength for the silver market as there's still uncertainty.
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May '14 Silver Weekly Chart
Source: RJO Futures PRO