Silver Wheaton

Silver Wheaton's rally since mid-May is of less than, er, sterling pedigree, since the most visually obvious ABCD piece of it has a point B high that is pure sausage.  The good news is that Tuesday's thrust created a legitimate and very robust impulse leg, along with an uptrend that has room for a little more immediate upside, since the target of our 'bad' pattern, 27.69, lies six cents above the so-far high.  From a trading standpoint, the rally will be difficult to enter at the moment, since it has been developing for three weeks.  My suggestion to camouflageurs and Pivoteers is to buy the low of an abcd retracement from 27.69, although it is impossible to say whether it will turn from p, or perhaps d. _______ UPDATE (June 7, 9:55 a.m. EDT): SLW blew past the target before pulling back, leaving bulls well in command. Traders looking to stake out a long at theses levels should reference May 4's 29.13 peak for camouflage. _______ UPDATE (June 7, 7:16 p.m. EDT): The stock looks feistier than most gold stocks at the moment, having pulled back just enough to be considered re-energized for a C-D leg to complete the bullish cycle begun last Wednesday from 25.12.  To get off the launching pad, the stock would need an 86-cent booster rally from a low above the point 'A' shown in the (new) chart.  If and when that trigger is hit, camouflageurs will have their cue to attempt getting long. _______ UPDATE (June 12, 9 p.m. EDT): Based on the pattern shown in the chart, the stock has tripped a 'buy' signal at 27.32.  If I hear from at least two traders in the chat room on got on board following my instructions, I'll establish a tracking position for your further guidance.

Yesterday's high fell 19 cents shy of the 26.45 target shown, telegraphing the extent of the weakness that followed The target is still valid in theory, but bulls would need to drive SLW a bit higher today, surpassing the external peak at 27.13 (see chart), to get back in the game.

The stock has taken off without quite reaching my "ideal" pullback level.  Regardless, the chart shows a distinctive external peak that can be used to get long via camouflage.  This implies waiting for an entry signal following a pullback from just above 25.82.  I'd suggest using a "timed buy-stop" (as detailed in the webinar) to get aboard, since the second stage of the rally (aka 'c-d') is likely to unfold quickly following a breakout above 25.82.  Note:  We hold the June 40-42 call spread at no cost, going back months.

Friday's robust thrust pushed the stock past no fewer than three prior peaks, two of them external. This is a very healthy sign, but also a possible set-up for a trading opportunity from the long side.  The chart I've reproduced shows that pullback to at least 24.15 would be needed to prime SLW for a follow-through thrust equal in magnitude to Friday's. Thereafter, using a chart and ABC pattern of 5-minute degree or less, Pivoteers should look to get long at the signaled 'X' of the larger pattern. The usual rules would apply from that point forward, including taking a partial profit at 'p'.  I'll establish a tracking position for your further guidance if at least two subscribers report in the chat room of having gotten aboard on the terms I've outlined.

One downside target remains at 23.70, although the ones that have fallen so far allowed us to avoid the temptation of augmenting our position on the way down.  Unfortunately, that target is not the worst-case I promised in today's commentary. That distinction goes to the 18.60 Hidden Pivot 'D' of the large pattern shown.  While my gut doesn't expect Silver Wheaton to fall that far, we'll rely nonetheless on technical analysis alone to divine things that logic and instinct perhaps cannot.  Meanwhile, I would encourage bottom-fishing at the 23.70 target in either of two ways:  1) bid 23.74, stop 23.59 for 400 shares, or 2) via camouflage, by four June 25 calls (which would be selling for around 2.00 with the underlying shares at or near the target. Stop yourself out of them, though, if they trade for 0.25 less than you have paid. _______ UPDATE (10:50 p.m. EDT): The 23.70 target gave way so easily that we should brace for a washout to 18.60 over the next 7-10 days (if not sooner).  Losses from either trade advised would likely  have totaled less than $100.  Today, nimble scalpers could play for a tradable rally from 22.15, the 'D' target (on the 240m chart) of A=31.03 on 5/1, B=25.57 on 5/9.  Alternatively, bulls could get back in the game with a thrust today exceeding 24.90. Don't pass up a chance to buy following a 'b-c' correction from just above the 5/15 peak located at that number._______ UPDATE (May 17, 2:44 a.m.EDT): 24.90 is still the number to beat for bulls to get back in the game. A 'b-c' pullback from just above it could provide camouflageurs with a relatively low-risk way to get long, although this may be possible from lower levels on the lesser charts.

There’s no point in pretending it’s those sleazy, child-molesting bullion bankers at Morgan Stanley, Goldman Sachs and  J.P. Morgan who have been pounding on mining stocks and bullion futures in the last few months.  Lately, it has felt like the whole world has been dumping them.  For the record, we are ourselves cautious buyers of bullion futures and select mining stocks at these levels, since many popular trading and investment vehicles that we track are closing on important Hidden Pivot correction targets. (Want to find out the exact prices at which were are doing the buying? Click here for a free trial subscription to Rick’s Picks, including real-time guidance and a 24/7 chat room where the discussion never stops.) When bottom-fishing in markets that have been falling as steeply as gold and silver have been falling, we recall the advice of our friend, the late Malcolm Watts: “When attempting to catch a falling piano,” Malcolm, a PSE option trader and gifted technician, used to say, “wait until it has bounced three times.” (It was not a falling piano that felled our friend when he was in his thirties, by the way, but the stresses of the market on an apparently defective heart.)  So, have bullion futures bounced the required three times yet? By our count, there have been more like four bounces since February. And although that may not mean it’s perfectly safe to buy the precious-metals complex at current levels, it does imply that those who waited are happy they did. By and large, however, precious-metal bulls are probably feeling shell-shocked by now, since many of the stocks that they hold dear  – quality companies like Silver Wheaton, Newmont and Yamana – have been sold nearly to death.  The shares of these firms and many others looked like great

We hold two June 40-42 call spreads acquired months ago whose cost basis after some earlier profit taking has been reduced to zero. Odds that the position will produce a profit are close to nil, but I'll keep it open nonetheless, since we may try to augment it now that we've blown out our small stock position. Unachieved targets below are at 23.70, an important Hidden Pivot that comes from the weekly chart; and at 24.79, a bottom-fishing number derived from the pattern shown. _______ UPDATE (May 13, 8:20 p.m. EDT): Last week's selloff fell just shy of generating a bearish impulse leg on the weekly chart. The actual low was 25.57, but it would take 25.34 to exceed a key 'external' low recorded on the weekend ended on October 22, 2011. Regardless, the two downside targets given above remain valid.

Positioning trades was challenging on this particular morning, since the broad averages were only moderately lower on appalling economic news. Europe was sinking further into recession, U.S. factory orders had taken their steepest dive in three years, and the private economy had created only 119,000 new jobs in April. Our approach was cautiously bullish nonetheless, and we considered a strategy for bottom-fishing in the E-Mini S&Ps on the assumption they would recover later in the day. An actual trade was signaled in Silver Wheaton as we watched, although the signal turned out to have been based on inattentiveness to the ‘Rodney Dangerfield’ of our short list of rules.

We hold 200 shares (or a multiple thereof) with an effective cost basis of 27.47, as well as two June 40-42 call spreads acquired months ago whose cost basis after some earlier profit taking has been reduced to zero.  Do nothing further for now, but be aware that yesterday's impressive-looking surge was barely impulsive on the hourly chart.  A pop above 30.65 would somewhat change that, putting the Bad Guys on the defensive, perhaps, as we head toward the weekend. _______ UPDATE (May 7, 11:22 p.m.): It looks as though the stock will be unable to avoid falling to the 26.79 target shown in the chart.  Since I'd be a buyer down at that level anyway, there's no compelling reason to blow out our position in expectations of establishing a better price.  The pain amounts to $140 or so for our position, so we'll just grin and bear it. Heads-up play would entail shorting call premium at the bell, but this stock frequently opens so viciously that I won't presume to be able to offer you a strategy that would cover all contingencies. _______ FURTHER UPDATE (May 9, 12:24 a.m.):  I can see no way to win this morning. Officially, I'll recommend exiting the stock if it trades 26.08 or lower.  It seems a foregone conclusion that SLW will open on a nasty gap, followed by a treacherously steep rally.  And then? Who knows? (There will be no guesswork about it, however, if you are monitoring the stock's impulsiveness on a 3-minute chart.)  Exiting with a loss would be due to inattentiveness on my part -- and would be absolutely inexcusable, since we had a fat profit following a beautifully timed entry.  We will make up the loss if one should occur, I promise, but as a reminder of what