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Wednesday, July 13, 2011

Silver/Gold - Beware Tops Near - Severe Declines to Follow

The explanation for the surge up today and yesterday in precious metals shows up in the symmetry charts.  I call Silver the "Silver Snake" because it is deceptive in the way that it trades with high volatility and "sneaky moves" often with large overnight gaps. 

As usual I am early in my positioning.  However, on the plus side I see the bigger picture developing and the timing has also become clear.

For markets and precious metals watch:

July 21 +/- 1 day - Top
Aug 10 +/- 1 day  - Bottom

When it comes to the markets there are no forks in the road.  The price will only go in one direction.  It can never go one way or the other.  Symmetrical analysis will show which direction is correct.  The symmetry shows clearly that Silver and Gold are nearing tops with severe declines to follow. 

Bearish sentiments for Gold will be allieviated to some extent by the current grind up.      

I see Gold is very close to topping out so I will keep my full short position in place for Gold and wait.

2hour Chart


Silver does have a little upside, and I will probably make some short term trades to better position.  It was a little early entry, and can do better.

There is certainly nothing wrong with just staying focused on the bigger picture, and wait for the bottom around August 10th.  Re-positioning may be advantageous, but is tricky and is not necessary either.

2hour Chart


Close up view. 

I'll cover Silver shorts at point 9, and can go long there (or just sit in cash) to point 10 around July 21st.  Dancing with a cobra...

30min Chart

86 comments:

  1. Thanks for the update, makes sense

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  2. Thanks a lot SC,totally makes sense.
    So silver will up around 40(39 for slv) to finish the last bounce then right after debt ceiling due in 9 days( pretty sure will be OK because of ''The validity of the public debt of the United States... shall not be questioned'')silver will doom.

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  3. That is the plan. I have more charts for Gold/Silver coming next few days that show some interesting timing cycles, patterns. Classic fake breakout here for the PM's.

    Looks ok on the surface, but the telltale signs are everywhere when dig a little deeper...

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  4. This mkt can drive one crazy because no matter what you do, you wish would have done things a little differently.

    The key is not to look back. Look forward, make any adjustments if required, and move on to the next trade.

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  5. SC

    How do your time dates Jul 21 and Aug 10 fit into the SPX? Do we hit a high with PM and then all tank into Aug? Looking for rally to maybe 1370

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  6. Yes Thai same timing as PM's. Up to 1350 or so July, down to 1290 or so Aug.

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  7. Silver still pushing up! I'm adding a final block short Silver here to make an overweight position. I still like a move to point 9 level probably tomorrow. I'll take profits there.

    Gold - just leaving it the same.

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  8. SC

    very nice chart. thanks for your hard work. silver is over 39 now. do you still wan to hold your short position?

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  9. I'm staying short until point 9. I think we can see that tomorrow.

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  10. It would have to start dropping today then right SC?

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  11. I would think so, maybe start slow and then spike down quite sharply at the end to finish tommorow.

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  12. Gold looks slightly weaker already, starting to lead down imo.

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  13. Thanks SC. follow to short slv. if it still goes up. when do you want stop?

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  14. Could have a stop at say $39.70 on the future for now. Silver should see downwards pressure today/tomorrow. Next week I see it going higher still though to point 10 July 21 +/-.

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  15. No position on SPX. Waiting for 1310 to go long.

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  16. Hi SC, do you still like SPX to get down to 1310-1315 area in the next couple of sessions? I expected it to open a bit weaker this morning but is pushing higher. Looks like it might be another fake break.

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  17. Agree Muzz, confident it'll come back down to test 1310 today or tomorrow.

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  18. We posted at the same time SC I see your still waiting for 1310 :)

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  19. There we go Silver finally running out of gas!!!

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  20. News out. As I've been saying no QE3 right now...

    Bernanke: No Plans to Add New Stimulus Measures Now

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  21. Next prediction:

    Debt ceiling resolved tonight. Mkt straight up like a rocket tomorrow. Making sure to be long today on the negative QE news 1310 area.

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  22. 1st crack of the upper channel...let's see if we gain any follow through & develop a new down channel. http://screencast.com/t/tk4j19iV

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  23. SC

    If SPX goes up like a rocket tomorrow, how can silver go down to point 9 tomorrow???

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  24. I think Silver goes down today to hit point 9.

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  25. Hi SC ,
    I am confused
    1/NO QE3: PM down . silver go to point 9
    2/Debt ceiling resolved tonight. Mkt straight up> does silver skip point 9 and go straight to point 10 ?
    So with 1 and 2 , which the direction for silver . PLZ elaborate, thanks

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  26. Sounds like a plan to me .....

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  27. SC,

    Point 9 is about $36 for SLV? Thanks?

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  28. TC both, Silver could drop hard today to point 9, and then rise tomorrow working towards point 10 next week.

    I am speculating on the exact timing, but this is a fast market.

    Blake, near $35.85 for SLV.

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  29. I hope you are right, I need 2 more points today if I can get it!

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  30. Everyone is thinking that the debt ceiling is resolved on the weekend. I see a few things that have me leaning towards tonight.

    No promises but we shall soon see...

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  31. So let's see if Silver and mkts plunge into the close today.

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  32. S&P only 7 points from your target SC.

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  33. SC: Any suggested B plan here for silver if it doesn't decline today? Just kinda worry it by pass point 9 and go higher again. If it does by pass, I will need to close short, I think. Thanks for the hard work.

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  34. Here we go SC 1310 approaching fast

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  35. Let's see what happens Roger nearer to the close. Plan looking promising...

    SPX could even undershoot to 1307. It seems to always go a little further than my numbers.

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  36. SC, from the chart, you want SLV from point 8(37.24) to point 9, now SLV already stretch up to >38.20, do you still think SLV can reach point 9 in one day, its hard to drop that fast while the market almost reach your goal : 1310.
    Plz update what you see

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  37. sold all my short for SPX, waiting for the bottom to jump in long for SPX.

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  38. Gold and silver gaining strength here. The miners seem to think the metals are going to push back up today

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  39. steam for silver and gold is gone i believe, highest 39.39 (this highest is the highest for like last 2 month) today and been dropping slowly. Since it didnt break 40, predict it will drop back to 35 or lower

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  40. Let's see what happens. Silver intraday timing is difficult to gauge. It can move fast.

    The miners may just be short term as Silver consolidates. I think it'll breakdown late in the day so will wait until then.

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  41. SC,
    Please update what you see on silver by the second, on the second!

    :)

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  42. SC, could it happen that there is no point 10 for silver and we start to decline once the debt ceiling is raised?

    No debt ceiling raised = US default = weaker dollar = higher commodities (silver, gold, oil)

    Debt ceiling raised = No US default = stronger dollar = lower commodities (silver, gold, oil)

    Im guessing this is the correct logic. So if and when the debt ceiling is raised I see the market going up and then silver crashing, no?

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  43. I like that out of the box thinking:
    Debt ceiling raised = stronger dollar

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  44. Would love to see PM skip point 10

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  45. Excellent point Lix and I think your logic is sound. The mkts reflect fundamentals over time, and your reasoning is why Gold and Silver should fall hard into Aug 10.

    As we know the short term can be irrational. Making profits is about Price AND Time.

    This is why I love working with time cycles and symmetry. It gives a view into the irrational aspects of the mkts.

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  46. I'm sure we'll see point 10 with Silver and Gold defy logic for a week.

    It's clear in the timing and symmetry.

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  47. Hi SC, why Debt ceiling resolved tonight >Mkt straight up? everyone pretty sure debt ceiling will be raised.
    Hi lix: Debt ceiling raised = No US default = stronger dollar > market stronger or will sell off?
    Thanks for explanation . I am learning

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  48. this at 11:45 on zerohedge just as slv spiked up.

    Obama Seeking Emergency Camp David Meeting, Boehner Just Says No

    So that might be a little bit more confirmation as to when the debt ceiling is raised silver will head down.

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  49. "everyone pretty sure debt ceiling will be raised."

    Not really. I see plastered all over CNBC default fears.

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  50. an excerpt from the article

    Reuters reports that Boehner has politely refused this latest farcical denouement, and told the White House "that he sees no need to move the negotiations on debt and deficits to Camp David."

    Im not well versed in politics and dont know what Camp David is but is this a message that they wont meet this weekend? I also dont know the schedule of meetings. Are they set to meet tonight and tomorrow?

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  51. TC, Im guessing IF the debt ceiling is raised the dollar will be stronger because of global confidence that the US will not default. I think the market will be relieved and will go up. On the flip side I think that this would lead to silver correcting to the downside along with gold, risk off for these metals.

    The closer we get to the deadline, 7 days, without a resolution would mean, and im only guessing, that silver and gold will reach new highs.

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  52. looks like if silver break down 38.6 it will be water fall

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  53. very complex market these days.

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  54. It sure looks that way Choppy!

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  55. Sure is Blake! I love it lol!!!

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  56. I could really use I nice break down.

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  57. Great call on the s&p today, SC.

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  58. Spot on SC, it did go a little further. SPX hit 1307, are you long yet? I picked up some positions around 1310.

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  59. New article on gold today by Clive Maund.

    http://www.safehaven.com/article/21720/gold-market-update

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  60. Yes, positioning in long S&P. Huge supports at 1310 for SPX, anything under that is a gift imo.

    One thought I am having is if Silver doesn't waterfall into the close today, then it could gap down hard in the morning instead. My orders are in to cover at point 9.

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  61. i hope your target will be reached today. i am not sure hold or not. i already got heart attacked

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  62. SC,
    NYMEX already closed. I doubt we'll see any waterfall.

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  63. Thanks Bob. Leaning in that direction. Tomorrow Silver plummets initially on debt news. That fits with your thinking Lix.

    I'm staying short overnight if no action today.

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  64. Yes, quite sure now. Silver only a little downside today and probably somewhat rally into the close. Tomorrow severe gap down for Silver to point 9.

    Staying short Silver with orders to cover and take profit tomorrow.

    It only makes sense Silver moves big on the news, not before!!!

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  65. Your orders to cover are about 35.85 SLV ???

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  66. Do you expect the dollar to rally on the news?

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  67. Yes roughly $35.85 SLV. Dollar to rally initially, then slump after. So may also see 1305? tomorrow morning for SPX.

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  68. doesnt look like much action for SLV till close. pretty much everyone is waiting on news before pulling the trigger. Talk about testing being patient.

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  69. Stage is set for tomorrow while the politicians play their poker games.

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  70. Look likely point 8 to 9 will happen very fast. Thus after cover short tomorrow. It seems not that profitable to chase point 9 to 10. Just wondering maybe I will wait until point 10 to come and short after that. Cheers.

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  71. SC,
    you think GOOG earnings will spoil the silver short party tomrrow??

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  72. I think the debt ceiling news coming tomorrow, and that is most important and should overwhelm google.

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  73. hi SC

    Just got short silver today - hope it was a right move I made.... lets see

    Took 50% profits of today on TZA my shorts and holding rest for tomorrow - if I get a buy signal on indexes tomorrow I will take rest of tomorrow.

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  74. Good stuff Sqwii. Your fib dates were correct, well done.

    I'll show the chart today for what I am expecting for SPX tomorrow.

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  75. SC

    Thanks a lot - well we dont know.. yet....

    But as I said my fib dates for a bottom where end of this week (Thursday/Friday) so lets see if we gap down tomorrow to 1300 or so before higher ? Or we rally from here

    I have a potential backtest of broken trendline we had , and then a possible rally to come from here.... time will tell...

    If I get buy signal tomorrow , I would load longs and short silver and gold...... as fear goes away , gold and silver should plunge IMO !

    Best

    Chris

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  76. How do you guys manage risk when holding leveraged ETF's like ZSL and GLL overnight? Silver and gold are traded 24/7, but these ETF's are not.

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  77. Verra, I don't use leveraged ETFs (I don't like the erosion factor when holding longer than a day trade) but when I trade securities that are only available during market hours (most stocks and options) I still use the futures market to hedge. For example, you can use the futures market to offset a ZSL position by buying three times the notional principal in silver futures. This fully hedges you and then you can exit both positions during market hours no matter how price fluctuates.

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  78. Although I still think it may be a little early, shorting silver here for the intermediate term will get a great trade. I expect to see at least $30 eventually if not significantly lower. I'll be using ZSL soon!

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  79. For shorting silver side, I'll be using HZD. It's cheaper then ZSL and the performance seems slightly better. Not sure if market location is a concerned or not, since HZD is in Canada TSX.

    By the way, for catch the upside of S&P 500. I'm considering to use UPRO, though I saw some people here talk about TNA. Are they lots of difference? It seems UPRO also slightly better in performance wise. Thanks.

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  80. Roger, it just depends on what's in favor. UPRO is straight 3x S&P performance, while TNA is based on small cap. Usually, but not always, TNA will outperform UPRO in a bull market run. But it also tends to lose more on pullbacks :).

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  81. chart posted on 07/08/11, referenced fractal similarities in time & price: http://screencast.com/t/W3R20ZWq
    Updated version:
    http://screencast.com/t/lS3VrVUkG
    Closed out TZA/ERY over the past two sessions. I agree we may tag a new low (would love to see a 1295 print), although I concur with SC, the pattern suggests a sharp rebound with potential into the mid/high 1330's. Personally, I will be looking to leverage in to TNA, as /TF underperformed today. My preference is TNA as a trading vehicle due to liquidity & momentum.

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  82. H&S top on /SI? http://screencast.com/t/RwpEiL2ba0eG

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