Silver (SLV) is down for the month and weakened significantly following the FOMC meeting. Taylor Dart breaks down why the dip could be a good buying opportunity.It's been a rough month so far for the silver (SLV) market, with the metal down 10% in less than 20 trading days, erasing its outperformance vs. the S&P-500 (SPY). Following last week's negative reaction to the Federal Reserve Meeting, silver's year-to-date return now stands at a paltry (-) 1%, vs. a (+) 12% return for the S&P-500. This significant underperformance has put a minor dent in the Silver/S&P-500 ratio. Fortunately, it hasn't inflicted any material damage to silver's technical picture or the Silver/Gold ratio, which continues to trend higher. The good news is that we continue to track quite similar to the early 2000 analog, with the base-on-base pattern still intact. Let's take a closer look:
(Source: TradingView.com)
If we look at the chart above, we can see that silver broke out of a massive multi-year base in 2005 and spent nearly two years going sideways before resuming its trend and making new highs. Just last year, silver also broke out of a multi-year base to new highs and has spent nearly 12 months going sideways now in a volatile 25% range. This volatile range is likely frustrating many investors, but it's pivotal to stay focused on the big picture. Unfortunately, many weak hands are shaken out during these base-on-base setups, left exiting near the lows in the early innings of a new bull market.