Silver

Without intending it, Rick’s Picks may have become an oasis for gold and silver bulls who are at the point of despair over the mining sector's relentless, and presumably unjust, plunge. We have good news for you:  Using technical tools to tweak your timing and risk management, it’s possible to buy “crap” stocks all the way down without getting hurt if you’re early. We use the word “crap” ironically, of course, since it is only when stocks have been beaten down as badly as those in the mining sector that they become screaming bargains. And that pretty much sums up the situation as far as we’re concerned. Not that the blighters who have been doing the selling couldn’t bludgeon bullion shares even lower before they relent. In the meantime, wouldn’t it be lovely to take all that stock from their undeserving hands -- and to do so without penalty or punishment if we are premature? On the subject of mining-sector “crap,” a perfect example is the execrated and abhorred GDXJ, an Exchange Traded Fund (ETF) that tracks the shares of junior gold mining companies.  Although it has an ardent following among Rick’s Picks subscribers, GDXJ has unfortunately proven treacherous to the financial health of long-term investors. Some of them may have thought GDXJ looked like a great bargain a couple of months ago when it was trading for around $30 a share, down from a high of $43 in 2011. We told subscribers to hold off on buying, however, warning that the stock could eventually fall to $20 or even lower. That is still a possibility. Nonetheless, to avoid missing a possible long-term bottom, we started nibbling at 23.93, a “Hidden Pivot” target first advertised in the newsletter when GDXJ was still above $26.  The buy at 23.93 proved timely

Compelling opportunities for night owls were in scant supply Sunday evening, but I've nonetheless highlighted an interesting possibility in June Gold if it should dip lower overnight.  My Silver tout is unchanged, since any attention that an update might command would probably be wasted.

Zzzzzzzzz.  As noted here earlier, Gold will need to pull Silver out of the doldrums, since it's made no headway on its own for nearly a month. As before, to get long I'll suggest using a 'b-c' pullback from just above the 32.090 peak-let labeled in the chart. However, the odds for success would improve if the approach to that peak is sufficiently choppy to make a marginal breach of it — say, by a tick or two — look initially like a double top.

A resurgent gold could pull silver out of its funk today, but there would be fewer handholds in the latter for camouflageurs if this should occur. My suggestion would be to use a b-c pullback from just above the 32.090 peak-let I've labeled. However, the odds for success would improve if the approach to that peak is sufficiently choppy to make a marginal breach of it -- say, by a tick or two -- look initially like a double top.  You can learn to do this stuff yourself, probably more quickly than you might imagine. Click here.

The 29.355 target noted here earlier should continue to serve as a minimum downside target for the near term. Oscillations around the 'p' midpoint associated with that number have now stretched to a month, implying that bulls are not going down without a fight.  Although that's encouraging for the future, it won't necessarily prevent a washout low in the days ahead.

Gold and Silver futures had steep moves yesterday, and although this will make "camouflage" tough to find for getting long, it does not preclude the possibility of using a timed buy-stop. For a hypothetical idea of what your entry opportunity might look like, check out the chart accompanying today's May Silver tout.

May Silver did everything we could have asked of it and more yesterday, blowing past a series of peaks from the last few days, but also muscling its way past one more external peak "along the wall" for good measure. The rally is a bit steep for us to presume that entry via camouflage will be easy, but the conditions are right for attempting it via a "timed buy-stop".  Essentially, this means getting long at the 'X' trigger, but sticking with the position only if it is in-the-black after perhaps 30-45 seconds. The accompanying chart is meant to instruct, but also to inspire. ______ UPDATE (2:09 p.m. EDT):  Silver has fallen hard, giving up all of yesterday's gains and more, and bringing into focus a 29.355 downside target (daily chart, A=37.580 on February 29 and B=32.490).

Gold and Silver had rallied a day earlier, but we found good technical reasons to avoid having this color our usually grey objectivity. Weakness was in fact evident, mainly in the narrow failure of June Gold to reach a clear and compelling rally target. A similar observation obtained for the E-Mini S&P, which was rebounding after the previous day’s selloff, the biggest so far in 2012. This vehicle ,too, had fallen just shy of a clear rally target, giving us reason to infer that weakness would soon return. Finally, we talked about preparing psychologically to trade in a bear market. Because the camouflage technique was developed in the context of a market that has been trending upward for more than three years, we will need to adapt our thinking before we are comfortable shorting tops rather than fishing bottoms.

The tout for June Gold is actionable, but my advice calls for using a conventional trendline as a reference point to determine when the futures have broken out and are suitable for "camouflage".  The Silver analysis remains unchanged.