Let's Get Down to Silver Tacks

Although I was skeptical of holding a silver miner I had swung long over the weekend and elected to sell first thing yesterday at the opening bell, I am also reticent to describe the current price action in silver as a classic "bull trap." 

In order to be a bull trap, silver and its derivative miners (likely dragging gold and gold miners with it) would need to accelerate lower from current levels and effectively shut a trap door on longs who had hopped onto the "silver squeeze" thesis. Specifically, the SLV ETF, below on it monthly timeframe, would need to breach the underside of the widely-identified bull flag, holding below $20. Clearly, that has not yet happened. 

It is worth nothing, and this is a concept of semantics we have disused many times over the years with various examples in real-time, there is a distinction between an initial, faded breakout which subsequently sees price "squat" back into its consolidation zone, versus a bonafide bull trap, described above. 

Hence, although the heightened emotions of the moment lead many to conclude, "There goes another Reddit bag-holder deluxe trade!" the reality is that we ought not be shocked at what has just happened.

Consider just how much bigger the silver market is than, say, GME was a few weeks ago in terms of market cap--$1.5 trillion-plus for the former versus $1 billion for the latter. It was too tall of a task to expect even the plethora of newcomers to the Reddit train to overpower all the whales in the silver market, especially with the CME raising margin requirements on silver futures. 

Furthermore, the monthly bull flag is such a wildly popular and was hailed as a slam-dunk pattern that of course an initial stutter-step cannot be shocking. 

Overall, the long-term silver bull case remains alive and well as ubiquitous monetary debasement from major Central Banks seems inevitable. However, this near-term hiccup should be respected as tons of trapped longs get shaken out and set up a larger consolidation. 

But the bull trap thesis is premature. All I see is an initially faded, obvious breakout.