Silver Market Fundamentals

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Silver does appear to be benefiting from a slight improvement in overall macro economic sentiment, but since that optimism seems to be heavily dependant on positive action in global equity markets, the silver trade is still somewhat skeptical. The bull camp might point to the recent interest in the $18.50 level on the charts as a sign that prices want to work higher, while the bear camp could suggest that the recent pattern of higher highs has shown very little in the way of definitive upside momentum. At least in the short term, the silver market appears to be trading in sync with equities and that in turn suggests that classic physical commodity market fundamentals are driving silver prices. It should also be noted that flows in and out of the exchange warehouse have become rather volatile recently and that suggests the silver market is clearly facing shifting winds. Comex Silver Stocks were 118.150 million ounces down 426,274 ounces. Silver stocks have increased 12 of the last 20 days. At least in the early going today, the silver market is favoring the upper portion of the recent consolidation zone. We see initial resistance today at the $18.50 level, with additional resistance seen up at $18.57. On the other hand, close-in support is seen at $18.21 and that is also the 21 day moving average level today. Unless the equity markets manage a distinct range up extension today, we suspect that silver will fight very hard just to maintain prices above the $18.50 level.