MY ANALYSIS

Fundamentally, if the U.S. DOLLAR INDEX continues to rally we could see a change in trend in this market. However, I do not believe that there is any solid reason for the U.S DOLLAR INDEX to sustain a rally particularily because there is so much TARP MONEY left to spend. Therefore I'm convinced if COMEX SILVER can hold here we are going to retest and move through previous highs, but the next few days will tell.

Technically, COMEX SILVER has pulled back to a critical MA indicating a BUY if it holds here. See daily chart below.

OPTIONS PLAY

MARCH SILVER-$18.20/OUNCE
OPTION EXPIRY-FEBUARY 26TH
CONTRACT SIZE 5,000 OUNCES
LEVERAGE FACTOR-$1=$5,000
BUY 21.50-22.50 BULL CALL SPREAD

We also buy in a 3 to 1 ratio an outright PUT in case the market makes a MAJOR move against us.

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