Tuesday, January 13, 2015

Silver hasn't made nearly as much headway as gold in recent days. Although the latter pulled back to a midpoint pivot Monday ahead of a presumptive strong push higher, March Silver has yet to even reach that threshold. That would require a 53-cent thrust from these levels -- quite a move merely to reach the starting line. In any case, while there is immediate upside potential to as high as 18.710, buyers will have to prove their mettle first with a decisive push past p=17.110. By 'decisive,' I mean to imply at least 5 cents, or 17.160. Night owls looking to get ahead of the move should note that the very minor pattern shown at the right-most edge of the chart tripped a buy signal at 16.510, and that the 16.590 mipoint resistance associated with it has already been exceeded by 5.5 cents. This would imply a follow-through Monday night to at least D=16.750, but anything significantly above it would add to the likelihood that p=17.110 of the larger pattern will be  achieved. ________ UPDATE (January 15, 11:57 p.m.): Silver has fallen well behind gold, having spent the last three days dawdling at the 17.110 midpoint pivot identified above.  My short-term forecast for gold is bullish, but it remains to be seen how far it can get with silver tugging so hard the other way. ________ UPDATE (January 18, 7:08 p.m.) The futures have pulled back after spiking on the opening Sunday night to 18.025. The 18.710 target is well in play, but you should be prepared for a pullback to as low as the 17.110 midpoint pivot noted above before buyers can complete a bull move signaled in the first week of January.

The 1264.00 target we've been using for about the last ten days remains viable, especially after yesterday's pullback precisely to the midpoint Hidden Pivot support at 1217.50. If you bought the retracement, as I often advise, stick with it, since 34 points of upside potential remains between current levels and the target. A 'mechanical' buy at 1217.50 would have dictated a stop-loss at 1201.00, assuming risk:reward held constant at 1:3.  In practice, a stop-loss as tight as two ticks would have worked, since the futures never traded yesterday below the midpoint itself. _______ UPDATE (January 15, 8:43 a.m.): Surprise surprise: The March contract surged $30 this morning, peaking so-far at 1264.60, an inch from the target we've been using since...forever.  This target is not chopped liver, as I like to say, and so any progress above it -- and the sooner, the better -- the more encouraged we should feel about what's next.

The futures proved virtually untradable Monday, even though we began the day knowing exactly where they were headed.  The opening bar saw the March contract fall to within two points of the 2017.50 target shown, where it hacked and wheezed its way to nowhere over the next five hours.  Could we have gotten short overnight, just ahead of the opening bell?  Answer: no -- at least not easily, since the overnight high occurred in no-man's land, vaguely between a midpoint pivot and its associative D target. Assuming we're in for more of the same on Tuesday, the only tactic I could recommend would entail shorting a minor rally target overnight, but with the intention of sticking with it if the futures screw the pooch again for the next four hours, as occurred Sunday night.