June 2011

Silver's ascent Sunday night is more than a vague waft, since the so-far high is 70 cents above Friday's settlement.  Even so, the futures will need to rally another 30 cents, surpassing a peak at a peak at 37.190 made Friday on the way down, to re-energize the hourly chart. Night owls should be prepared to seize the advantage if there's a pullback from two or three ticks above that high, since the follow-through burst could come quickly.  I've include a chart that sketches out such a possibility. ______ UPDATE (4:18 p.m. EDT):  The futures popped above 37.190 to create potentially usable camouflage, but the buying opportunity we were looking for has yet to materialize. Instead, a back-and-fill downtrend has eaten up the day, yielding no follow-through C-D rally, nor even a point C' low so far.

The nearest short-term resistance lies at 1556.50, a Hidden Pivot that can serve a our minimum upside target for the now.  Shortly after midnight, camouflage was difficult to come by, since the seemingly enticing pattern shown lacks an adequate b-c pullback as well as a single-bar 'C'.  Please note the 1595.60 target of a larger pattern going back to April 12 remains viable. (It's equivalent to the 1594.90 target given here earlier for the June contract.) Its midpoint 'p' sibling lies at 1529.80 -- the exact low of Friday's target-affirming pullback.

Friday's low occurred in the tight range between two Hidden Pivots I'd flagged. I had to redraw the chart with 120-minute bars to see why. As it happens, there's a Hidden Pivot midpoint at 1294.75, a single tick from the actual low at 1294.50. The bounce from it was nasty if you were short, but now we at least 'know' that a breach of the pivot will consign the futures to more slippage down to at least 1273.50, its 'D' sibling. There is also the 1276.50 'D' of the larger pattern, so a strong bounce from either number, or from the tight spread between them, is extremely likely if the futures get down there (as seems likely). Which they will.

Check out today's touts for Comex Silver and Gold, since they give the precise location of midpoint supports that must hold if bulls are to begin next week on the offensive.  The most bullish thing that could happen today is impulsive reversals on the hourly chart in each without the supports having been reached.

Bears appeared to struggle for yardage, and although there are no compelling downside targets at first glance, a serviceable one at 73.40 comes into focus if you extend the downtrend with an imaginary line. Beware, however: If buyers can push this vehicle above the tiny look-to-the-left peak at 74.83 shown in the chart, they'll likely come flying out of the gate when trading resumes on Sunday.

A 1291.75 downside target given here yesterday remains viable, although we might see a bounce from a lesser hidden support at 1297.50.  The higher number looks like the better place to try bottom-fishing with a tight stop, since the lower closely coincides with a key low at 1290.25 recorded on April 18. If that last number is breached on a closing basis it would imply that the selloff from the May 2 peak is picking up steam and is likely to continue into next week. Minimum downside target thereafter: 1276.50.

A midpoint support at 35.525 is equivalent to the one I've flagged in Gold, and if it fails we should prepare for more downside to as low as 34.705 over the near term.  Since the midpoint is two cents beneath an obvious structural support, I'll suggest bottom-fishing there with a three-tick stop-loss. This Hidden Pivot is worth a shot because the breach of the structural support would be read as a breakdown by the herd.  _____ UPDATE (8:21 a.m.): We got stopped out for small change when the midpoint evinced no discernible support. This has put the 34.705 target in play, and the futures would now need to rally above 36.775 to hint that things are turning around.

A midpoint support  not far below, at 1525.40, may provide a clue as to how much energy bulls are holding in reserve.  This Hidden Pivot comes from the pattern shown -- one that was tentative when I  mentioned it in the chat room Thursday morning before boarding a plane for a college reunion in Charlottesville.  The support sits too close to a structual low at 1525.10 to be useful for bottom-fishing, but we can probably infer that a breach of $1.50 or more, or a close below it, would tip the odds toward a further correction down to as low as 1513.60, its 'D' sibling.  Notice how that would refresh the bearish trend by creating a new low beneath the 1515.60 print on May 26. _______ UPDATE (8:24 a.m. EDT):  The bounce has come from within two ticks of the forecast, but Silver's relative weakness looks like it will suppress a strong recovery in Gold today.

[More than the torrent of debt money the central bank has pumped into the U.S. financial system, it is lies and delusions that have so far sustained prosperity’s dying gasp.  In the guest commentary below, Wayne Razzi argues that there are worse things to fear than economic collapse itself – namely, the loss of basic rights and freedoms as hard times cause politicians to seek radical solutions.  Will the sovereign individual be able to resist the encroachment?  It is time we pondered the question, for reasons that Wayne makes clear. RA] My last predictions here could loosely be summarized as follows: “Why what should happen probably won’t because they’ll do whatever it takes to achieve their outcomes…” The recently replay of the 1980 Silver Heist, with its curiously-timed margin hikes, reinforces the suspicion that Their playbook hasn’t changed in the interim.  I reference it only because it appears that the powers that be are about to enter another phase during which they’ll need to work their old plays aggressively. As I survey the sphere, I see something resembling reality attempting to intrude upon the farcically engineered state of stock-market utopia that’s been presented for our consumption by the ever-reliable mainstream media (MSM).  I feel embarrassed to write this, but is it still possible that a correction could be allowed to occur?  It certainly seems overdue. Dig around a little and you’ll find that the GDP is closer to 0.5%  -- and likely on its way to below zero in real terms if you strip out all of the government life-support contributions and tune out the illusions. Normally I’d be able to continue writing about how we could see things begin to falter -- the obligatory chain-reaction that would cause over-levered (i.e., weak hands) to panic much as they were forced