Silver suffered its worst one-day drop in as long as we can recall, but this should be viewed as merely corrective rather than the end of the bull market begun in March from around $12. I am optimistic because last week’s high at 29.915 decisively exceeded an ‘external’ peak at 29.32 recorded more than seven years ago. That peak is what we refer to as a ‘look-to-the-lefter’, and although by definition it is visually insignificant, it offers just enough resistance to help us distinguish between half-hearted rallies and the real McCoy. If the buying driving silver higher in recent weeks had lacked guts, it would have failed to penetrate the long-ago peak. That said, I can only guess right now how low the selloff will go. Somewhere between $23 and $24 seems visually logical on the intraday charts because of late July’s consolidation above $23, but to make any headway bears will first have to force the futures beneath $25 on a closing basis to show who’s boss. ______ UPDATE (Aug 12, 4:13 p.m. ET): The futures bottomed almost exactly between $23 and $24 as anticipated. Although bulls dominated for the rest of the day, the lows will probably need to be tested before a rally to $30 and higher can begin in earnest. ______ UPDATE (Aug 13, 9:10 p.m.): Silver’s energetic rebound from Tuesday’s shallow abyss has ‘bull market’ written all over it. Nasty selloffs are supposed to be recouped quickly, and that is exactly what is happening. Its bounce has outpaced gold’s by moving decisively above a midpoint Hidden Pivot resistance at 26.98. This suggests not only that the futures will achieve a minimum D=30.385 (click here for chart), and soon, but that we can expect a close above it with little ado.
SIU20 – Sep Silver (Last:27.555)