Silver Buzz

Silver is currently at the center of the financial universe.  The buzz in silver corresponds with a blowoff top move on the charts.  On Friday, CNBC Fast Money talked continuously about silver and the precious metals.  While some of this is latecomer speculative buying, its seems more like shorts getting squeezed out and throwing in the towel.   Surprisingly, the put/call ratio in SLV was 0.83, and net deltas were not that high.  So you had quite a lot of SLV put buying by speculators and hedgers.  In comparison, the put/call ratio for GLD on October 16 when it had its blowoff top was 0.35.  

With so much less call options speculation and more skepticism about silver than gold, there is a chance that there are still too many shorts in the trade, and you could get one more leg up later this week before you get a sharp reversal of the trend.  If we do get another move up later in the week, it could be worth a shot to go short or buy puts.  With the IV sky high, I think shorting offers a better risk/reward.  

The move in silver and other precious metals only happen during complacent, heavily speculative market environments.  Its not as if we needed more proof that investors have very little fear.  The go to rationalization for being long silver is currency debasement.  And then some will talk about AI demand, etc.  But those rationalizations could have been said 5 years ago, 3 years ago, 1 year ago.  I think its just pure greed driving the move.  

Over the past week and through the Christmas holiday, you got the Santa Rally in the S&P 500.  It was about the most expected Santa Rally that I can remember, which could set up a post Xmas hangover now that you are almost at year end.  Since the Santa Rally was front run a few days early, it would not be surprising to see the end of the Santa Rally front run a few days early.  Last year, you had a short, vicious selloff after Christmas.  I don't expect it this time around, but I think a move that takes the SPX back down towards the levels it was at during triple witching, around SPX 6870, looks doable within the next few days.  

You also saw a lot of selling in the high beta, speculative sections of the market, with space, quantum computing, nuclear, and AI data center names taking big hits on Friday even though the SPX was flat on the day.  Those stocks appear to be saturated with retail bagholders who are underwater and causing a lot of overhead supply to come out after up days.  

We are now in the corporate stock buyback blackout window, which lasts until late January.  We also have delayed capital gains selling that takes place in early January after big up years.  The price action in speculative tech, bitcoin, and overly bullish sentiment are signs that a pullback seems ripe to happen at anytime.  It may not look like it on the SPX chart, or from what you hear on CNBC, but the bears have a lot of things in their favor for early 2026.  I will be looking to put on shorts in stocks and maybe silver this week, to play for January weakness.