Silver broke through its Sunday-night high on Wednesday (a day after gold did) and continued edging up toward the 43.060 target that was noted here yesterday. Because we are still focused on that target, let’s take a look at something that played out on Wednesday in the silver market and in our chat room. I decided not to include in yesterday’s silver tout a smaller pattern that was taking shape and which, with a pair of “A” points, projected to “D” targets of 42.020 and 42.090. The attached chart indicates why the pivots in that area did not seem sufficiently hidden to justify a trade recommendation. The specific fear was that, as mentioned in the tout, silver was in position to impulse powerfully through a number of prior highs. In the early afternoon silver popped up to 42.025 and then quickly fell fourteen cents from that level. It doesn’t look like much on the chart, but a trader who had seen the pattern ahead of time (and perhaps some did) might have been able to grab a quick $500 per contract. Bear in mind that the 5000-ounce COMEX silver contract is worth $25 per tick and $50 per penny. At that time I posted both targets in the chat room but also said that I was not recommending any action. Nine minutes later, silver climbed to its high of the day at 42.095. Less than two hours after that it made a low of 41.330, or $3800 per contract below the target. This experience should stand as a reminder that good-looking patterns are going to give us their share of accurate midpoint and “D” target reversals, and that someone who takes one small risk after another trading these pivots is likely to come out well ahead over time. “P” and “D” reversal trades are, of course, only the counter-trend side of hidden pivotry. The with-trend side involves the camouflage technique, which we will discuss in upcoming touts. (Posted by Doug “harry” McLagan)
