Silver

Unlike gold, silver did not finish the week with a showy thrust. However, since the former's move was decisively bullish on the intraday charts, we'll give all bullion vehicles the benefit of the doubt for now. Use the 26.48 target shown as an upside objective, but be careful near p2=25.21, since secondary pivots can be a show-stopper for under-powered rallies. The 'reverse' pattern I've drawn should work for 'mechanical' set-ups, implying that a pullback to x=22.68 would be a 'buy', stop 21.40.  Theoretical risk on entry is $6400 per contract, so the trade is suggested only for those who can cut it down to perhaps $300 with a 'camouflage' set-up on the very lesser charts. _____ UPDATE (Nov 10, 11:04 p.m.): A fearsome spike pushed the futures to within less than half a penny of the 25.21 Hidden Pivot I'd flagged as a possible danger spot. Some subscribers reported using the 60-cent pullback that followed to leverage short positions initiated at the top.  If and when a new burst of energy trashes p2, we can train our sights on the 26.48 target given above.

Silver had looked like a good bet to negate the bearish pattern shown last week with a push above C=24.95, but buyers couldn't muster the extra ounce of lift it would have taken to succeed. Instead, they ended on a weak note, albeit less beaten up than gold. There's not much to say at the moment, but we should set a high bar before allowing ourselves to get excited over the next rally, however it plays out. In the meantime, use p=22.65 as a minimum downside target. Please note that I am not suggesting a buy there, since that would not be a legitimate 'mechanical' set-up.

The rally from September 29's low at 21.60 has 'Matt's Curse' going for it if little else. This trading rule, formulated by subscriber Matt Barnes, holds that a reversal from very close to p2, the secondary pivot, is a good bet to stop out the pattern. I'd originally rated a 'mechanical' short at x=23.80 a so-so bet, but given the precise low at p2, I am no longer recommending the trade (other than via a 'camouflage' set-up, since that can reduce entry risk by as much as 90%, providing attractive odds for an otherwise risky speculation).  We'll see what Monday brings, but if you're jones-ing to trade this howling banshee, stay close to the chat room. ______ UPDATE (Oct 23): The steep rally of the last three weeks came with a zillionth of an inch on Friday of validating 'the Curse'. It would have occurred with a push above the 24.95 point 'C' high of the bearish pattern pictured here. The breakout we are likely to see next week will provide an opportunity to get short in the 'discomfort zone', but let's do so gingerly if at all, since bulls may at long last be getting the upper hand.

The bounce from p2 is bullish, since it turned the futures around well shy of the bearish 'D' target at 20.36. The bad news, at least for bulls, is that the December contract would trigger a 'mechanical' short if the rally continues to the green line at 23.80. I would rate the trade a 6.6, meaning it is neither strongly enticing nor for everyone. We can attempt it nonetheless if there is sufficient interest in the chat room. Presumably, we'd use a 'camouflage' set-up, since a conventional entry would face initial risk of $23,000 theoretical on four contracts. _____ UPDATE (Oct 14, 11:20 p.m.): There's no point trying to be a hero as the week draws to a close. For all we know, the rally could be the real deal. Let's simply observe for now.

Silver has rallied off a low that didn't quite make it down to a 'D' target, and that is slightly bullish. I've redrawn the chart to show the new downside target of a bigger pattern in order to provide counterpoint to a somewhat more bullish chart in gold (see above). To get a more balanced feel for bullion, we'll treat this rally as a 'mechanical' shorting opportunity -- either at the red line (22.65), or possibly the green (23.80).  The first trade was elected last week and on Friday was slightly profitable. It would take a stop-loss at 23.42, although I'm not suggesting doing the trade belatedly. If the rally continues to the green line, the stop on a short there would be just above  the 'C' high, at 24.95. We may attempt it, so stay tuned to the chat room. Short-term, your bias should lean bullish.

The downside target at 21.16 that we've been using for a while remains not only viable but likely to be achieved, given the downtrend's decisive penetration of p=23.05 ten days ago. The move has been taking its sweet old time, however, chewing up shorts last week with a ratcheting hump that produced little net change. As in gold, a strong rally to the green line, however unlikely, would trip a signal to get 'mechanically' short. The trade would not be for the faint-hearted, though, since the theoretical risk on four contracts would be around $19,000. Obviously, this one is not for beginners; nor would it even be an exceptional opportunity. We'll consider it on its merits nonetheless if and when it gets there, assuming the December contract doesn't fall straightaway to D. _______ UPDATE (Sep 28, 5:30 p.m.): December Silver has been tap dancingon the 22.11 'secondary' pivot for nearly two weeks, substituting  dread for tedium for investors who have watch the futures fall 15% since early August. The initial plunge through p=23.05 strongly implies that it's only a matter of time before D=21.16 is reached. ______ UPDATE (Sep 30, 7:03 p.m.): Silver has taken a leap from a low just above our 21.16 target. It is bullish that the futures didn't quite get down there, but in any event, I'd suggest taking this rally seriously, since it is coming at a time when stocks are finally starting to look like hell. It was always going to take a major paradigm shift in the economy to light a fire under bullion, but perhaps this rally is announcing that the wrenching shift lies just ahead.

Silver has fallen Sunday evening to the 22.11 secondary Hidden Pivot of the pattern shown (inset), but the weak bounce so far implies that if and when the support gives way, the selloff will continue down to at least D=21.165.  The pattern is a little too obvious for high-odds bottom-fishing , but it will still make it difficult for December Silver to take another leg down without an upward correction first from D. Accordingly, I"ll recommend a 'camouflage' set-up  on the 5-minute chart or less to get long, using an 'a-b leg' small enough to limit theoretical entry risk to no more than $750 per contract. Nudge me in the chat room when appropriate if you are looking for further guidance in real time.

I still like the prospect of bottom-fishing if December Silver falls to the midpoint pivot at 23.05 shown in the chart (inset).  The a-b segment of the rABC set-up is shorter than I'd prefer, but there are no visually evident 'artificial' segments I can recommend.  If you are comfortable with reverse set-ups, you could locate point 'a' about halfway along the rally leg begun from the 23.815 low recorded on September 2. That would make the a-b segment about 60 cents, yielding about $1,500 of entry risk per contract.  The shorter a-b would reduce that to around $1100. _______ UPDATE (Sep 16, 9:25 p.m. ET): If you followed my guidance, you hold two contracts with a cost basis of 22.87 and a small paper profit at the moment.  The first trade got stopped out and is shown in this chart with 'c' located in its original spot. The second trade was  triggered off the subsequent bar's 22.585 low, and half the position would have been exited at p=22.87. You're on your own for now -- I will be traveling on Friday -- but please let me know in the Trading Room if you hold a position and take a profit/loss.

The bullish 'reverse' pattern shown is equivalent to the one given in the gold tout just above. It shows promise for 'mechanical' bids not only because the pattern itself is less visible to the riff-raff than a conventional ABC, but also because the bombed-out low (c) will cause most traders  to think the rally is corrective. I do myself, but that wouldn't stop me from leveraging the pattern to get long if price action sets up the trade the way we require. The precise stall at p could also prove useful, since it augurs a tradeable pullback from 'D' precisely if the target is reached. _______ UPDATE (Sep 8, 8:56 p.m.): Let's shift our sights south, since the futures tripped a theoretical sell signal today.  The more promising trade will entail bottom-fishing with rABC if the downtrend hits p=23.05, so stay tuned.