Silver Wheaton

The good news is that Silver Wheaton appears to have a 15% rally ahead that will be well nigh unstoppable. Push and pull will combine to lift the stock, respectively, via a Hidden Pivot rally target at 40.70, but also via the magnetic attraction of a trendline that has figured prominently in the SLW's ups and downs for more than a year.  A two-day close above the trendline should suffice to set it on its way toward new all-time highs, but until that happens we should not take for granted that bulls still rule.  The 36.49 midpoint resistance of the pattern shown has already been exceeded by a whopping 89 cents, lending weight, if not quite certitude, to the 40.70 target that sits, as of today, just above the trendline.

Use the 36.760 target of the pattern shown as a minimum upside objective for the near term. You might note as well that a larger pattern, also show, is the first we've seen in a while with the potential to push the stock above 40. The actual target, a Hidden Pivot, lies at 40.700, and it would be no worse than an even-odds bet if and when the futures have closed for two consecutive days above its 'p' midpoint, at 36.485.

Silver Wheaton is within striking distance of an 'external' peak which if exceeded would signal the genesis of a powerful impulse leg with the potential to turn the intermediate-term picture decisively bullish. It lies at 34.61, exactly 1.70 points above the high of yesterday's spike.  In order to be valid as an impulse leg, the thrust would need to be unpaused (i.e., have no b-c correction) once the internal' peak at  33.02 is surpassed.  Rather than speculate, we'll wait for the stock to tell us whether it is ready to emerge from the woods.

Silver Wheaton's ability to mildly buck the trend in recent days has generated some buzz in the chat room. Before you bulls give your heart to the stock, though, I'd suggest taking a look at the chart that accompanies today's SLW tout.

Silver Wheaton has managed to swim upstream in recent days, but let's see it push above the 42.89 'external' peak shown in the chart today or tomorrow before we become true believers. The same chart shows that the 42.50 top of yesterday's spike came with 32 cents of a Hidden Pivot target going back to June 20's 29.80 bottom (aka point 'A'). _______ UPDATE (11:51 a.m. EDT):  The stock has collapsed today, opening on a 6.2% gap lower, at 38.10. Subsequent weaknesss has brought it down to as low as 36.66, representing a loss of 9.8%.  The move is strongly impulsive on the hourly chart, though not yet on the daily.

We hold the September 42/46/50 call butterfly spread four times for $1.04.  You can take this position off at will for 2.10 or more, although the stock will need to pop above 43 or so to give us a fighting chance to double our money. Note in the accompanying chart that even if the stock is carving out a head-and-shoulders pattern, there's still room for a pop into the mid-$40s before it tanks.  The longer it merely goes sideways, though, the less threatening the pattern will become. _____ UPDATE (September 14):  I'll record a $416 trading loss just to get this stinker off the sheets.  It could have been worse, since we legged into the first part of the position when the price of silver was freefalling.

There are two Hidden Pivots that could stop Silver Wheaton's marauding spree, at least for a while, and I've used them in today's touts to establish a small short position against the bullish butterfly we already hold.  Whether or not you do the trade, the price points are worth your attention if you follow the stock.

We hold the September 42/46/50 call butterfly four times for $1.04, and it has gone from a longshot bet to a 5-to-2 horse in the last two weeks.  Because the stock is coming up on two Hidden Pivots that have some potential stopping power, let's trade against our position by buying some puts. The targets lie, respectively, at 41.55 and 42.77, so I'll recommend buying four September 38 puts if the lower number is approached today within 4-6 cents.  Stop yourself out if SLW trades 41.71 or higher, but re-short using the September 40 puts if 42.77 is closely approached.

Most of us expected mining stocks to get hit when the broad averages finally collapsed. Take a look at the hourly chart of this stock before you despair, however, since the carnage has been far worse for companies not in the gold or silver business. I've reproduced a chart of Apple on this page today as well, and as you can see for yourself, Silver Wheaton's chart looks no worse. We continue to hold the September 42/46/50 call butterfly for $1.04.