Thursday, April 26, 2012

Today's commentary was intended to brighten the day for silver bulls, but my touts for both Silver and Gold evince some finer technical shadings that are not quite so bullish.  In any case, I wouldn't get excited about either metal until such time as gold pops above a not-so-ambitious trendline that I've been featuring for a while.

It is bullish that GDXJ has turned higher without having quite reached a 22.29 midpoint associated with a 'D" downside target at 20.72. However, there's not much we can do to get back on board, since the closest 'external' peak that would be usable for camouflage lies at 22.91. I"ll set a screen alert there and signal if a 'b-c' pullback suited to our needs occurs from just above it.

We hold 200 shares (or a multiple thereof) with an effective cost basis of 27.47, as well as two June 40-42 call spreads acquired months ago whose cost basis after some earlier profit taking has been reduced to zero.  Do nothing further for now, but be aware that yesterday's impressive-looking surge was barely impulsive on the hourly chart.  A pop above 30.65 would somewhat change that, putting the Bad Guys on the defensive, perhaps, as we head toward the weekend. _______ UPDATE (May 7, 11:22 p.m.): It looks as though the stock will be unable to avoid falling to the 26.79 target shown in the chart.  Since I'd be a buyer down at that level anyway, there's no compelling reason to blow out our position in expectations of establishing a better price.  The pain amounts to $140 or so for our position, so we'll just grin and bear it. Heads-up play would entail shorting call premium at the bell, but this stock frequently opens so viciously that I won't presume to be able to offer you a strategy that would cover all contingencies. _______ FURTHER UPDATE (May 9, 12:24 a.m.):  I can see no way to win this morning. Officially, I'll recommend exiting the stock if it trades 26.08 or lower.  It seems a foregone conclusion that SLW will open on a nasty gap, followed by a treacherously steep rally.  And then? Who knows? (There will be no guesswork about it, however, if you are monitoring the stock's impulsiveness on a 3-minute chart.)  Exiting with a loss would be due to inattentiveness on my part -- and would be absolutely inexcusable, since we had a fat profit following a beautifully timed entry.  We will make up the loss if one should occur, I promise, but as a reminder of what

June Gold would have come all the way down to 1571.30 if it had gotten hit as hard as Silver has recently.  Instead, it remains in a tiresome state of limbo, capable of inspiring neither fear nor greed.  Our one-size-fits-all trendline comes in mid-day today at around 1664.70, but it would take only 1655.30 to trip a bullish signal on the hourly chart.

So far so good.  The May futures have taken a healthy bounce from within a penny-and-a-half of the 29.940 pivot I began drum-rolling here on April 5.  We'll continue to trust but verify, however, since there's no room for hope or hubris in this game. You should be aware in any case that if Wednesday's low should fall, we'd be looking at more slippage to at least 28.680, a fresh 'D' target calculated from the next point 'A' high up the ladder.  Camouflageurs looking for a way to board should focus on the five-minute chart, where a suitable 'external' peak at 30.800 occurred yesterday at  10:20 a.m.

Is the worst over for silver? From a technical standpoint, both the Comex futures and Silver Wheaton shares have done exactly what we might have expected of them if they were carving out a durable bottom.  On Monday, the mining stock came with a single penny of a 27.97 correction target where we’d told subscribers to get long using an 8-cent stop-loss. Then, yesterday morning, May Silver futures trampolined from a low that lay just 1.5 cents from a correction target also identified using Hidden Pivot analysis. In both instances, powerful rallies began from within a hair of the targets, raising the odds that an important low is in.  Our 29.940 price objective for the May Comex contract was flagged three weeks ago when the futures were trading above $31 an ounce.  Yesterday’s explosive bounce from 29.925 carried them all the way to 30.740 -- an 81-cent surge that would have been worth $4000 to any trader lucky enough to have caught the entire ride. As for Silver Wheaton, subscribers have been instructed to hold onto half of any shares they may have bought when the stock bottomed Monday at 27.96.  Yesterday, tracking the ballistic move in bullion futures, Silver Wheaton traded for as much as 29.79.  That represents a gain on paper of more than 8% in less than a week, since subscribers were told to take a partial profit near 28.61. With our cost basis effectively reduced to 27.47, we can afford to let our profits run. But will the move continue? It’s impossible to be sure. However, based on the energetic leap that these two silver vehicles have taken so far, we are encouraged to hold onto at least a small portion of our original position in Silver Wheaton for a potential four-bagger.  We should note in