September Silver became a 'mechanical' short in theory with last week's run-up to the green line (x=24.403), but it looked too revved up as the week ended for the trade to be enticing. My gut feeling is that the futures will hit the red line (p=23.33) first, even if they eventually stop out the short, but we'll look for low-risk opportunities to test this theory rather than trade with a bias. If bears lose this round, that could signal a run-up to as high as 28.48 over the next 5-7 weeks (daily, A= 20.42 o 3-10).
The daily chart yields a mixed picture, the same as the one in COMEX gold. My bias is slightly more bullish for the ETF, though, since the moderate rally that began the week exceeded an 'external' peak that was absent from bullion's graph. This created a bullish impulse leg with potential to lift this vehicle as high 38.28 within the next 2–3 weeks. Friday's pullback to the green line (x=34.30) generated a weak 'mechanical' buying signal, but we'll ignore it until we've seen a few more daily price bars. ______ UPDATE (Aug 28, 6:29 p.m.): Today's robust rally closed just a micron above p=35.63, a compelling Hidden Pivot midpoint, but that's sufficient to tip the short-term outlook bullish. A sharp stab higher or a close above p for a second straight day would make more upside to D=38.28 a strong bet.
I seldom give a second thought to head-and-shoulders patterns, since they are everywhere one seeks them. The one shown is so well-formed, however, that it's worth pondering. Putting the pattern aside and looking at the chart intuitively, there is obviously a lot of weight sitting on bulls from distribution that took a month to carve the ominous picture shown. With the average price of a gallon of regular gas threatening to push above $4, we should cross our fingers and hope the pattern works its magic, sending crude down to the low $70s and denying refiners a windfall blowoff to $5/gal.
TLT tripped a 'mechanical' sell signal at the height of last week's run-up, which featured a powerful gap-up opening midweek. Buyers spent the rest of the week head-butting the green line where the short was signaled, making the ostensible opportunity seem less appealing at the closing bell. We'll be better able to predict the next significant move once we've seen how this vehicle behaves on Monday, so stay tuned. Sharp weakness would portend more slippage to D=88.93. _______ UPDATE (Aug 28, 6;39 p.m. EDT): TLT has given nothing back since a short squeeze pushed it sharply higher last Wednesday. This created a quite bullish 'island reversal' that has shortened the odds of a further run-up to D=97.84, the Hidden Pivot target shown in this chart.
Since the dollar bettered my moderately bullish expectations last week, I've deployed a bigger reverse pattern that will give the rally more running room. Even so, we'll be watching closely for a stall, possibly fatal, at p=104.65. That's a midpoint Hidden Pivot resistance, and the usual rule applies: If it is impaled on first contact, that would shorten the odds of a further run-up to the next HP level, p2=107.19. The Matterhorn is March 8's 105.88 print, and if it's decisively exceeded, the 109.72 target would be in play. That could not but reflect a sea change in the global financial picture, so we'll be keeping a close eye on the price benchmarks noted above. ______ UPDATE (Aug 23, 7:06 a.m. EDT): The dollar is headed for a crucial test of the 104.03 Hidden Pivot resistance shown in this chart. Remember, almost NO ONE wants a strong dollar, since it will increase the financial burden on EVERYONE who owes dollars. (Do you know anyone who doesn't?) That is the chief and most destructive symptom of deflation, and it is a vastly larger creature than the relatively puny inflation that Covid stimulus loosed on the economy. The deflation juggernaut has been gathering irresistible force since long before Covid, and we may be about to find out whether its time has finally come. With mortgage rates above 7%, it is already enjoying a powerful tailwind.
Last week's sharp decline missed the minimum downside target at 4336 flagged here last Sunday by an inch, denying us an opportunity to play the bounce into Friday's close. This is no tragedy, however, since the futures are unlikely to go much higher before they resume their fall to the "D' target at 4237.75 shown in the chart. My confidence in this outcome is based on the decisive penetration of p=4436 on Wednesday. It is still more bearish that the futures never closed above the red line after breaching it for the first time. Getting short has grown more difficult as the downtrend has lengthened. However, if you aspire to catch a ride south, tune to the chat room, which has been well up to the task.
The update I put out Wednesday night nailed the week's low at 1914.20 within $1. However, because no one reported a trade, I haven't established a tracking position. I expect the downtrend to resume this week and to hit D=1897.90, a Hidden Pivot that can be traded with a tightly wrought rABC (i.e., reverse-pattern) trigger. There could also be a tradeable bounce from 1911.50, but it should be bottom-fished only by Pivoteers who know how to find this voodoo number. The 1897.90 pivot is obviously important, since a breach could send December Gold groping for traction below the Feb/Mar lows around 1883. _______ UPDATE (Aug 23, 10:23 a.m.): Gold is off to the races this morning, presumably on a track to nowhere that has come to resemble a Möbius strip. Despite my skepticism, however, and because the rally is solidly impulsive on the intraday charts, I'll offer this bullish view as though I were a true believer. Like most fetching 'reverse' patterns, this one is all but guaranteed to work well no matter what your purpose.
What a mess! Even so, the pattern shown in the chart meets our criteria for accuracy and reliability in subtle ways, so let's assume the cycle of hard-selling begun from 25.47 a month ago is headed down to at least D=21.18. In the meantime, we should be alert to shorting opportunities if last week's so-far weak bounce gets legs. A run-up to p=23.33 would trigger a relatively risky 'mechanical' short, stop 24.04, but there may easier ways to do it, so stay tuned to the chat room for timely guidance. ______ UPDATE (Aug 21, 9:29 a.m.): A subscriber reported shorting silver based on the above. My response n the chat room, for your guidance, was as follows: "My target missed the top of the nasty spike by 0.03, but I hadn't expected it to be reached so dramatically. Is your stop at 24.04, the number in the tout? That implies 72 cents of theoretical entry risk. However, you could have cut that to 11 cents using an rABC set-up that triggered at 23.25, with 23.15 as the threshold for partial-profit-taking (15m, a=23.07 on 8/17." D=22.93). _______ UPDATE (2:49 p.m.): The futures bottomed an inch from the 22.93 target I provided in the chat room, generating a profit of as much as $2,000 per contract for shorts from 34.33. Shorts covered near 22.93, then reversed and turned into long positions, could have made an additional $2,000 per contract, since the bounce took Sep Silver all the way back up to the intraday high. All the swings were gratuitous and orchestrated by thieves, but as I hope as has been demonstrated, such movement is perfectly predictable and easily tradeable.
I've drawn a bullish reverse pattern, but only to highlight a target failure that is bearish. GDXJ's decline since mid-July's peak at 39.70 'should have' turned from the pattern's 'D' target at 34.70. It did, but so feebly that a trader would need to have been nimble to extract even a small profit. The subsequent relapse took this symbol to marginal new lows, where buyers and sellers spent most of the week mucking around. This is sloppy price action, and although I am not going to write off the possibility of a resolution to the upside, my expectation is for lower prices in the weeks ahead. ______ UPDATE (Aug 16, 7:38 p.m.): This glue horse and its sleazy handlers have eyes for the 32.25 low recorded in March, and they will not rest until stop-losses below it have been triggered like land mines on the Ukrainian front. That price, by the way, is a major point 'C' low associated with a 45.56 rally target that was missed by $1.50 in April.
The midpoint Hidden Pivot support at 93.15 shown in the chart provided a so-far weak bounce to 94.19, but it's too early to tell whether the reversal is the start of something big. My hunch is that it is the start of something small and that a 'mechanical' short from x=95.26 will be a winner. That's assuming TLT gets there, which is somewhat optimistic considering the relentlessness of the selling.
