Comex March Silver

As noted near the bottom of today's commentary, Comex Silver is lagging Gold badly and needs to pop today if it is not to become a serious drag on the latter. I've set the bar at 16.970,but keep in mind that once the rally exceeds the first of the two labeled peaks, it will need to climb above the second without a distinctive correction. Notice in the accompanying chart that camouflage would have worked to get long for the final hour or so of yesterday's bull move.  It will be tougher to find now, though, since any further progress to the upside is likely to produce an obvious breakout.  Expert 'camo' play:  On the 3-minute chart, check out the tiny gap between peaks at 16.740 and 16.755, respectively at  9:18 a.m. and 7:45 a.m. on January 28.  A pullback from a top occurring between them could get you aboard ahead of a breakout.

Silver's hourly chart offers more clarity than Gold's right now, and I've settled on a pattern with three single-bar coordinates to produce a 15.360 correction target. The midpoint support at 16.160 associated with that number has already been trounced, yielding a negative bias for the near term.  The bearish outlook would be decisively negated via a pop above  16.785 today,  but we can use a far subtler signal at 16.465 on the three-minute chart to tell us more speculatively when this may have occurred. _______ UPDATE (1:45 p.m. EST):  Silver is frisky today, but it lags gold and has not yet impulsed on the hourly chart. That would require a minimum 16.760 (versus a so-far high at 16.680), but we'll raise the bar somewhat and stipulate that 16.970 be reached by Tuesday's close to keep the good times rolling.

There is carnage on the daily chart that has yet to be confirmed by Gold, and it would grow far worse with just 20 cents of additional slippage beneath Thursday's low. That would extend the bearish impulse leg begun ten days ago past a second "external" low at 15.835 recorded back in September, increasing the potential power and longevity of the move.  My immediate downside target is 15.745, subject to last-ditch support at its sibling midpoint, 16.035.  Alternatively, it would take a thrust above 16.785 today to turn the hourly chart unambiguously bullish.

A $1.00 drop from these levels over the next two days would do serious technical damage, since it would create a powerfully bearish impulse leg on the daily chart.  Such a move would in fact exceed four prior lows, two of them "external," leaving an unambiguously negative picture for the intermediate term (i.e., 4-6 weeks).  Most immediately, the rally from yesterday's v-shaped bottom had the potential to get the futures out of immediate jeopardy.  It had stalled a penny from a 16.920 midpoint resistance, but assuming this obstacle is breached before 16.730 is exceeded to the downside, a follow-through thrust to at least 17.105 would become an odds-on bet.

A bearish pattern analogous to the one I've identified in Gold projects to 17.170, a target whose attainment will be subject to a possible midpoint bounce near 17.590.  Both numbers will remain viable as long as 18.015 has not been exceeded to the upside.

Silver is still acting more bullish than Gold, although that doesn't necessarily mean it can go its separate way higher. Regardless, we're stuck with an 18.715 rally target until such time as the target's point 'C' at 18.475  has been exceeded to the downside. For Silver to get in bearish gear with gold, the March contract would need to fall below 18.400 today.

The three-tick stop-loss I advised on longs from 18.415 would have ejected you from the trade on the exact low of the day.  If you compensated for my chimp-like foolishness with a little brains and a slightly wider stop-loss, congratulations, since the ride from the low has been 43 cents so far.  I'd suggest using a minimum upside objective of 19.03 to manage the risk of whatever position you may still hold.

The corrective pattern in Silver looks less reliable than the one I've flagged in Gold, although there's a comparable midpoint support at 18.415 that we can use as a minimum pullback target.  You can try bottom-fishing there with a three-tick stop-loss, but be aware that this is a riskier play than in Gold.  On the weekly chart, Silver has already blown past the midpoint resistance analogous to the one proffered in Gold. The Hidden Pivot was at 18.425, a whopping 50 cents below the peak recorded by the March contract in December.

Silver is tracing out a rally pattern somewhat different from gold's. The immediate target is 19.030, and if it's hit, that would remedy nagging doubts that surfaced when the stock surged on Monday without knocking off the external peak at 18.990 recorded on December 4 (see inset).  If a rally today exceeds the target by more than three tickets, we could confidently infer that the key high at 19.500 from December 2 will not long endure.