Ahead of the FOMC; Panic Sell-Off?

Silver made a quick rebound to $28 last night over Asia, and I reinstated the Core Position and ramped it up by 300% with the Spec Position as planned (see 1/21 post: Managing a winning position). I must say I’ve been pretty lucky with these levels, but as shown in the chart below, the break below $28 was a key event so it was reasonable to expect a re-test of that level. Since then, silver has sold off over a buck, and I covered the Spec Position just now at $26.75. I’m pretty tempted to shed half of the Core Position as well, but I’ll probably wait it out until NY opens..who knows, this could be just the start of a panic sell-off; it’s pretty much a vaccum from here to $25.

[Silver COMEX MAR'11: 1-week]

Don’t forget..Fed day is coming up this Wednesday! It’s very nerve racking to hold a large position heading into an FOMC meeting, especially following a strong trend; I’m glad I found a good level to cover the Spec Position ahead of time (again, assuming no panic sell-off tomorrow). For this week’s FOMC meeting, I expect absolutely no change in Bernanke’s statement for the simple reason that there’s really nothing more to say (and the markets expect that, for now) – not every FOMC meeting has to be a market changing event. Regardless, markets will most likely trade choppy over the next three sessions, and I will be on the lookout for opportunities to ramp up the shorts (yup you guessed it, assuming no panic sell-off tomorrow).