the daily MACD and 14 day RSI are getting to an extreme that has historically produced at least a significant bounce (within days).  There have really been only two exceptions to this, which won’t be reassuring or very enlightening–2008 and 2011 (when silver started its crash).

In 2008 when we were at similar readings, the carnage in silver vs gold continued on for a couple of months, more or less straight down.   The drop was accompanied by huge gap down days that came after severe sell offs (so trying to exit on a bounce was basically impossible).  Obviously, we are very oversold on SLV:GLD now, but if this is a repeat of 2008, we will probably see a large gap down before anyone has a chance to get out.  Fun stuff.

One difference between then and now was that back then, SLV:GLD consolidated in a very tight range for about 1 year before breaking down.  I don’t know if this is a guarantee that this time is different and we are at an imminent turn, but conventional wisdom would suggest that we have not built up enough energy to have a 2008-type breakdown.