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Sunday, March 4, 2012

Silver - Large "M" Pattern Still Bullish

On September 24th, 2011 as shown in the last chart, an "M" shaped bounce was indicated due to the analysis of a large scale Silver price pattern.  Then, on October 30th, the first high of the large scale "M" pattern was called at the orange trendline as expected in the September 24th analysis.

October 30th analysis:

"For Silver a dip to test near the midfork this week is the plan. A rounded top in a tight sideways range should follow after that dip. Once the rounded top is complete, a decline to test the September low is anticipated."

http://cyclicalmarketanalysis.blogspot.com/2011/10/silver-rounded-top.html

Silver topped out at the orange trendline, and then declined to test the "September low" as expected in the October 30th analysis.  Remember that the September 25th low for the Silver futures was much lower than SLV traded during the day on September 26th.  Considering this, the "M" pattern has been quite exact in price. 

However, importantly, notice that the "M" pattern took longer to form in time than anticipated originally in the September analysis. 

In March, there should still be one final push above the orange trendline to complete the "M" pattern. 

Additional patterns and price targets for Silver will be updated later in March when the "M" is nearing completion.  Once the "M" completes, the large price pattern indicates a massive collapse in the Silver market.  I expect the Silver bear market that started in April 2011 to continue with a vengeance...    

Daily Chart















The following chart is from October 30th analysis:

60min Chart















The "M" pattern was shown on September 24th in accordance with my large scale price analysis for Silver.  The "M" did take longer to form than shown in September, yet the price action was accurate. 

This delay in timing is also why my analysis for SPX turned bearish prematurely.

The following chart is from September 24th, 2011 analysis:

Daily Chart

102 comments:

  1. Silver/Gold bulls won't be pleased with my analysis that Silver is again nearing resumption of the April 2011 bear market.

    However, once the bear market for Silver completes, the "longer term" cycles for precious metals are amazing.

    ReplyDelete
  2. I will have large scale analysis coming soon for SPX.

    ReplyDelete
  3. Also, new Gold analysis is coming soon.

    ReplyDelete
  4. thanks for the charts.. wondering what do you think will cause the plunge to 18 dollars?

    ReplyDelete
    Replies
    1. Basically all markets are facing a severe selloff in 2012 as I will show with my SPX analysis.

      At this point Silver trades mainly as a commodity. It is not widely used as money YET. Currencies are still in POWER though the tide is slowly changing. From my cycle work Silver/Gold bulls are correct, but it is a timing issue with long term changes in terms of currencies etc...

      Delete
  5. Hello SC,

    Thanks for your analysis and charts.
    They are awesome but I really wonder and want to know the supportive points for your bearish expectations.

    Thank you so much for your efforts.
    I appreciate it.

    RB

    ReplyDelete
    Replies
    1. Hi,

      I wasn't planning on doing this Silver update until later in March, but then I realized I couldn't properly explain my outlook for the S&P in 2012 without first discussing the precious metals and how the whole picture fits together.

      See the response just above for some general reasoning. I will explain further the pressures in the Silver market once I outline my 2012 targets for the S&P.

      Delete
  6. Thanks, I will look forward to see your comments.
    Bye.

    RB

    ReplyDelete
  7. Hi SC,
    I understand that prices will dip in this year and after that, metals will rally upside.
    My question to you,In your opinion when will we see these two tops in March and what entry and exit points?
    Thanks so much.

    ReplyDelete
    Replies
    1. Mid March I think Silver futures trade just over $38.

      Delete
  8. http://img585.imageshack.us/img585/7508/silveru.gif

    ReplyDelete
  9. SC,

    I am looking forward to plunge in silver price to $ 6 as you once mentioned...are you still sticking with that prediction or that is not valid now.

    Thanks

    ReplyDelete
    Replies
    1. Hi SC

      Curious to know you mention UVXY is going to be around 6.30-4 on March 7, how about HVU?


      Thanks!

      Delete
    2. Yes, Stockboom still the same. I will discuss the how and when further once this move up for Silver concludes.

      Delete
    3. InvestBB, $10.40 is the area to watch.

      Delete
  10. Hello SC.

    hmm, interesting.

    My target - assuming the deflationary case, is $20 for Silver, maybe $17.50. That'd really annoy the metal bugs -and doubtless they'd blame it entirely on the usual suspects.

    thing is, even though there is clear meddling going on, we saw plainly what happened in 2008 deflationary wave. The metals will get seriously destroyed.

    As I always end with on such an issue...

    Any pullback in metals..is merely another bonus opportunity to load the truck.

    Good wishes

    ReplyDelete
  11. SC,

    you are sticking with a silver plunge to 6 dollars as stockroom asked? Are you serious about that... 6 dollar silver???

    ReplyDelete
    Replies
    1. Yes, dead serious. This is according to my large Silver pattern.

      However, Silver still has upside in March to $38 or a little above, and this will be the last chance to bail out of it before it collapses.

      Delete
    2. So SC if you are that bearish on Ag you must also be bearish on Au?

      Delete
    3. Ultimately yes, but I expect to see strength in Gold first. Gold will hold up better than Silver because it acts more as a safe haven.

      Delete
  12. SC, so now there is no extreme bearishness for SnP? 5% correction is all you suggest bears get short term?

    ReplyDelete
    Replies
    1. That is a short term target on the way down. My outlook for SPX is coming soon with monthly targets for this year, and it is bearish to say the least.

      Delete
  13. SC.. not sure if you have looked at a 40 year silver chart... we have had two large inverse head and shoulders on the chart.. price projection is 140... no way we collapse to 6 dollars...

    we just broke out of the last head and shoulders patter at 22 dollars and back tested during our latest crash to 26 dollars... i don't see how we can drop to 6 dollars...

    ReplyDelete
    Replies
    1. I know it is hard to imagine, but that is the reality according to the pattern. It has called all the major moves in the Silver market so I have confidence that is the end result.

      The problem with head and shoulders patterns is that the failure rate is high. They all look good, but confirmation is an issue.

      Delete
    2. SC, your timing for metals have been off by a few months. According to your earlier charts we should be trading under 20$/oz by now.

      Why do you think this time it wont be off as well? I can see a rally into the summer and deflation after.

      Delete
    3. Yes exactly, Silver did take longer than estimated in Oct, but the price action was accurate. This is a reason why my timing was too early for SPX also.

      What I am saying is that the Silver cycle is just about mature. There is very little time left now. No later than March.

      Delete
  14. Is this forecast based on the same approach that led you to miss 200 point rally from october lows? Honestly, i do not see any confirmations from time/price points that your model/approach is working this year.

    With CB's providing liquidity we may just get lots of volatility that will be hard to trade and predict for us regular folks or any model out there. Markets may be suggesting the down turn but all these cash injections/interventions may keep things up confusing traders.

    Its like a patient on death bed, you know that chances for long term recovery are next to zero but doctors keep the heart beating using all the tools they got. Predicting the exact time when they pull the plug is next to impossible.

    ReplyDelete
    Replies
    1. With regards to CB's my view is there is much less control. I believe that the timing is predictable because they simply react to the market cycles.

      Delete
    2. I agree that this is why we have seen all of the turmoil in the markets for years. The system is deteriorating. Yes, there are collapses followed by jolts of liquidity.

      Delete
  15. TVIX underperforming relative to UVXY

    ReplyDelete
  16. Hi SC,

    I would like to ask you, what do you expect for gold when silver hits 6$?

    6$ is really unbelievable and if it becomes real many silver investor Will be destroyed seriously then almost nobody can close to silver not for buying even for touching it.

    Thanks if advance.
    RB

    ReplyDelete
    Replies
    1. Ultimately yes weakness in Gold is to be expected, but I expect to see strength in Gold first up to $2,050. Gold will hold up better than Silver because it acts more as a safe haven.

      Let me discuss the targets for Gold later. I have a plan for Gold coming soon.

      Delete
  17. SC, gold silver ratio have been pretty good at predicting overall trends and price targets. We are in an uptrend on monthly charts, which started in may 2011.

    $6/oz silver would mean that gold silver ratio would have to go back up to all time high ~100 achived in nearly 90's, that would put gold at 600$/oz. This is a total collapse and with sovereign debt still not resolved i dont see this happening yet. If we see short term deflation continue to develop and gold is supported in 1300 - 1500 area worst case scenario for silver is 13-15/oz.

    $6 is out of question, unless you think this is the end of the bull market for metals for foreseeable future. ( and central banks are wrong again by buying at the top, as they were selling at the "Brown" bottom) Is this what you imply here?

    historical gold silver ratio chart:

    http://goldprice.org/charts/history/gold_all_data_silver.png

    ReplyDelete
  18. "this is the end of the bull market for metals for foreseeable future. (and central banks are wrong again by buying at the top, as they were selling at the "Brown" bottom) Is this what you imply here?"

    Yes, the Silver bull market ended in April 2011. The Gold bull market is not quite over yet imo. I still see a higher high at around $2,050 for Gold first. Then it is over too.

    ReplyDelete
    Replies
    1. Long term there is a much larger bull coming in my cycles.

      Delete
  19. SC,

    your assumption is totally wrong... silver always ends off when gold has formed its high.. its the price chasing mechanism.. if you are assuming that gold with form a higher high then silver will chase it as well... always has always will be. I

    ReplyDelete
    Replies
    1. I am bullish for both Gold and Silver short term. Last Aug/Sept Gold hit it's high, but this was a lower high for Silver from April 2011.

      Same thing again. Gold higher high coming, Silver lower high from Aug/Sept 2011.

      Delete
  20. SC,

    Not trying to down on you, but your price action for silver has not been on the mark. its been off by time and price... when you have stated in your comments previously that silver would rally it didn't. Whne you stated that silver would fall it did the opposite. How can your model purport to know what is going on when you get this details wrong... If the market were to crash to 6 dollar silver, the stock market would collapse... In that sense... everything would come to a stand still..... Then you assume another reflating will occur that will send silver and gold higher??? Not sure how i see this... but then again it is your model.

    ReplyDelete
    Replies
    1. The "M" pattern as drawn in Sept was early by time. The price movement has been accurate, and I simply underestimated in Sept how long it would take to complete.

      Silver crashed not once but twice last year, yet most can't see this being a bear market for Silver. Silver bulls need to think carefully in coming weeks...

      Delete
  21. ILUVPMS

    You obviously have a different model..........I look forward to you posting it!

    ReplyDelete
  22. China super cycle is ending, very valid point due to ageing population.

    http://www.marketwatch.com/story/china-super-cycle-is-over-2012-03-05?link=MW_home_latest_news

    ReplyDelete
  23. We close today with a list of popular fantasies. One cannot help but revisit the roster of myths and misperceptions, as they have become thoroughly ingrained in certain investors’ psyches over the past several years. The tabulator of the list, veteran market observer Ned Schmidt, suggests that making investment decisions based on what turns out to be little more than “conventional wisdom” (which is often anything but wise) presents risks to your wallet. Here then is the world of investment-driving fantasies that Mr. Schmidt has compiled for us to consider:

    *Government spending creates prosperity
    *Hyperinflation is imminent
    *Federal Reserve is running the printing presses
    *Keynesian economists are better forecasters than airport cab drivers
    *QE1 will produce economic growth
    *Inflation is good for gold and silver
    *Deflation is good for gold and silver
    *The sun is coming up for gold and silver
    *QE2 will produce economic growth
    *Gold is going to more than $2000 this year (a perennial favorite)
    *Silver is going to more than $100 this year (another perennial favorite)
    *QE3 is imminent, but everything!
    *US dollar is to implode
    *Euro is to implode
    *Social networking sites are real companies
    *CNBC is more informative than the Cartoon Channel
    *Bear market rallies are prices breaking out
    *Junior mining stocks are investments
    *Apple is a buy at $540, as per 54 out of 59 analysts
    *Iran will not build a nuclear weapon
    *Vladimir Putin is not a threat to world peace.

    ReplyDelete
  24. SC, do you think silver has finally bottomed ?

    ReplyDelete
    Replies
    1. I'm going to give it a couple days, and see how it behaves here.

      Delete
    2. $33 is a VERY strong support in my opinion

      Delete
  25. John Lopez...no more of a mnodel to post as SC's. My opinion is based on the same fundamentals that have driven silver this past 11 years..Debt and printing. Not just cycles...Maybe some should go back and read armstrong thecycle guru who proclaimed the death of gold if itclosed below 1645 in december....That was a short lived death only to rise above it.....

    Moreover, the two big crashes in silver are of the same magnitude as 2008... many proclaimed silver to be dead as well only to see it rise to 49....

    The two big crashes were our classical ABC correction... we are currently climbing the wall of worry...IMO

    ReplyDelete
  26. This comment has been removed by the author.

    ReplyDelete
    Replies
    1. H, this is interesting. How come increase by 0.4 in rates would force your bottom for metal lower? not sure im following..

      Whats also interesting is that gold lease followed silver lease rates and dropped both in sept and december, but not now! Which supports gold being stronger idea, this time around.

      Commercials are "shorter" now on silver than they were before December low but not as short as in september. Silver options look quiet.

      Delete
    2. AM,
      You are correct about the gold / silver as gold shows no valley at all (which really surprised me last week).

      The estimated silver drop in my calculation is directly proportional to the width of the lease curve valley "in days" at the top of the valley, multiplied times the depth of valley. This essentially calculates an area that is related to price drop. Choosing consistant points for the top of the valley is required for consistant results.

      So longer "days" in an ongoing valley formation increases the silver $ drop amount proportionately. A rising lease rate locks in the top right side of the valley so the final "days" width can be used to estimate the area and drop in price. In simplistic terms, thats about it.

      Sorry I erased the post. i don't post much and felt I may have overstepped after reading Stockbooms post.

      Delete
    3. There was no need to erase your previous post. I thought it was excellent actually, and welcome. In fact, I can repost it if you like.

      Thanks for posting these results. Very interesting, and appreciated.

      Delete
    4. Thanks SC.
      Yes, you can repost if you still have it and I'd be happy to share actual calculations and setpoints.
      A correction though, the calculation is currently at $15 low projection and 14 days from now the low would reach $6.

      One other note "supporting" your silver drops much more than gold theory :

      1) I use a "12" point pattern for gold (6 tops and 6 bottoms - even numbers are tops / odd numbers are bottoms). This pattern repeats and is inflated or deflated, however for gold it has been steadily growing more inflated each cycle. Each point to point has its own charachteristics. Starting at point 1 is the base and point 4 would be what some might call the top of the C wave (the highest pt - EW by the way is too confusing for me so I needed something simpler and not so subjective). Presently we would have just finished point 8 top and are moving to point 9 bottom. This pattern is similar to the one in 2006 and in 2006 point 8 to 9 drop was -7.5% and took 35 days. If we have topped at point 8 or are nearing 8, then we could have on average 35-7=28 days to the pt 9 bottom - or April 3 +/- 1 wk based on 2006 data. Following this drop using 2006 data would be a zig zag (+15%,-9%,+10%) to point 12 before dropping say 6% to a point 1 low in the Fall of 2012 and the start of the next big run to point 4 (+50% rise).

      2) With all that in mind, for silver, I use a "10" point repeating pattern (notice the offset from gold). The Silver pattern though has been "deflating" in the 2 cycles following May 5 2011. In this case point 1 is base (even numbers are tops) and point 2 is the highest top (like the silver $49 pt) and 2 to 3 is the monster drop leg. By this method, the Dec 28,2011 to Feb 28, 2012 leg was a pt 1 to pt 2 leg. So we are by my estimation now at the inclination pt of going down from 2 to 3, or the monster drop leg. It's possible that we could still be in the top of the 1 to 2 leg if we break 37.5, but when the down leg comes, it could be like the fall from 48.5 to 30 or worse if we have a deflationary episode.

      So in essence, Im saying that is why silver could drop much more than gold.

      As a final point, I have calculated cycle "low" bottoms and have postulated that multiple cycle waves exist inside gold and silver. For April 1 +/- 1 wk the two major gold waves and 2 major silver silver waves are projected to meet up at the "cycle low" bar for a drink. I'll be buying.

      Delete
  27. Hello Friends,

    I would request my friends here that instead of trying to prove who is right or wrong, just add your research and leave it.

    No reason anyone here should challenge SC's work as he is not forcing to follow him, he just put his analysis.

    Whenever he buys something he post here, it is upto individuals to decide whether he or she wants to follow his trades.

    I am sure there are many people in this group who is learning from SC's work and have faith in his work.

    Cheers

    ReplyDelete
    Replies
    1. Thanks. I'm all for healthy debate. Bull/Bear ideas are always welcome here.

      Delete
  28. SC whats the downside target for this week?
    Is it still the 1307 area for this week?

    ReplyDelete
    Replies
    1. I like 1307 for March 20th. There is more to go this week on the downside though. March 8th looks to be most likely for a bottom.

      Delete
  29. $6 silver... that's really, really hard to swallow. Bubbles usually regress back to where they started or a little below, which would put it in the high teens at best, but $6??? That's like AAPL regressing to $50. If Silver ever got below $10, I would rob a bank and invest all the proceeds in AGQ :).

    Seriously, if it goes that low, I will proclaim you king of all trend followers for life.

    ReplyDelete
    Replies
    1. I know - it is a long way down. The charts will be coming to show what I have in mind. There is support in the high teens, and bounces are expected at that level before continuing lower.

      I'm looking forward to buying big at the bottom myself. First, the short is a beauty...

      Delete
  30. Hi SC,

    Silver hit 33,09 level and now it is at 33,33 level.

    Do you expect more to go down or can it reverse from this points and go up?
    What is your max. down limit to hit for silver or from what level silver can be purchased with min. risk ?


    Thank you.
    RB

    ReplyDelete
    Replies
    1. RB

      I think anywhere between 31 to 32 can be good buy for short.term

      what do you think SC?

      Delete
  31. Silver looks attractive at this level. I see upside this month to $38. A brief spike down to just above $32 would be the maximum downside possibility.

    ReplyDelete
    Replies
    1. 60 cents downside possible with upside of over $5 imo...

      Delete
  32. Once again UVXY outperforming TVIX 2:1

    ReplyDelete
  33. SC, so you expect dollar attempted break out to fail? otherwise i dont see how silver can put in 5$ to the upside with dollar and gold silver ratio already moving up from the bottoms.

    ReplyDelete
    Replies
    1. Let me look closer at the dollar.

      Delete
  34. Are gold,silver, bonds and the dollar signalling a Greek default at close of business Thursday?

    ReplyDelete
    Replies
    1. I know sometime in March Greece was due for their first payment, is it Thursday?

      Delete
  35. Private bond-holders haveuntil close of business Thursday to sign up to the deal and anything less than 75% and the Greek government have stated that they will enforce the CAC's thus forcing the hand of the ratings agencies to declare a default.
    Unxder that scenario the ISDA will have little alternative other than to declare Greek bonds in default thus triggering the CDS's

    ReplyDelete
  36. SC
    Now SPX 1346.Silver $32.80. They were about 1360 and $34 yesterday. Both of them came down as parallel.Your lower target is 1315 for SPX.That's why if SPX will be 1315;woldn't be silver about between $31 and $32? Especially, when we think that tomorrow will be 7 March (or 7 March+ 2 day).
    Already now thanks for your answer.

    ReplyDelete
    Replies
    1. I've found it is best to look at SPX and Silver separately. There is correlation there, but it can be weak at times. Silver has strong support just above $32.

      Delete
    2. SC, Thanks for your labors.

      Delete
  37. SC any clues as to why TVIX is underperforming?

    ReplyDelete
    Replies
    1. It's still that premium issue. TVIX is like a buffer. It doesn't move as much on the upside or the downside as UVXY on a daily basis. However, there is no supply for it since Credit Suisse cut off the supply, so if buyers step in and gobble up the float it can bubble potentially much more than UVXY. This makes the TVIX speculative.

      For short term trading UVXY is much more predictable. Though TVIX has bubble potential...

      Delete
  38. Beetlejuice, TVIX is underperforming UVXY because of its huge premium from last weeks. The premium is absorbing the gains. Once that is done, it should trade in sync with UVXY.

    ReplyDelete
  39. I think SPX is getting ready to hit a ST bottom in the next 30-60 min a few points lower. 1338?

    NDX looks firmer over the last while.

    ReplyDelete
    Replies
    1. If it hits 1338 today will you exit your TVIX trade?

      Delete
    2. I'm going to unload UVXY soon from my entry at $5.37. TVIX I'm still a little underwater, may just hold for a higher high later in the week.

      XIV isn't appealing to me at this time.

      Delete
  40. NDX cycle peak chart that I posted last week..

    http://tinyurl.com/76t65sh

    It would not surprise me to see somewhere around that March 26th area for a low. This could also extend to that early April low area from that larger picture chart.

    ReplyDelete
    Replies
    1. ZZ, great. thanks. there was a bunch of fibo time zone's in late march early april, so looks good.

      So, guys, is the top in now?

      Delete
    2. ZZ, had some fun today.
      called out 2pm in the AM, and got lucky.
      http://i40.tinypic.com/ab36om.png

      the T planting is a bit unorthodox, but it was located based on the inverted T before it.
      -GG

      Delete
  41. Sold UVXY at $6.04 from $5.37 a few days ago. Some minimal upside is still possible today. It might trade higher later in the week. I'll look to buy it if it dips first. We'll see.

    ReplyDelete
    Replies
    1. Hi SC
      congrats on that gain. awesome play

      wondering what your take on TVIX this week? you mention a higher price, how high you thinking?

      think you mention a low on march 7, so if we do reach that (you happen to have a target price?), would you consider XIV then? you mention XIV isnt appealing to you at this time, are you looking at other product?


      Thanks!

      Delete
    2. Hi SC

      On that topic with March 7 the low, curious to know why you would sell a day early with UVXY?


      Thanks!

      Delete
    3. Just decided to play it safe, book the gain, and still have the TVIX to get back on track. I suspect that tomorrow the market may even manage to bounce and bottom on the 8th. It seems there is little downside today/tomorrow perhaps.

      I'll consider XIV later in the week. I also like Silver. So there are a few ideas to consider.

      Delete
    4. TVIX may have a shot at $18 something this week though it has been tough to pin down lately. UVXY $6.30-50 is possible later in the week though it may dip first.

      Delete
    5. According to veloctiyshares.com, TVIX closed with an intrinsic value of $13.88. With the 15% move in the VIX today, TVIX is now trading at a discount.

      Delete
    6. I'm still showing about $1.30 premium for TVIX today. This has shrunk quite a bit today though. Remember it is based on the VIX futures so the % are a bit different than the VIX itself.

      Delete
  42. looks like Nas100 and SnP may bounce tomorrow. Short term bottom in?

    ReplyDelete
  43. Hi SC

    Do you see a likely bounce tomorrow morning as well?

    Thanks!

    ReplyDelete
    Replies
    1. Looks like a ST bottom is nearby anyways. I want to see a little more action. Let's see how things shape up into the close.

      Delete
  44. Hello SC,

    When do you think silver will start it's rising to your price target? It went to under 32,50$ today and it is now approx 32.84$.

    ReplyDelete
    Replies
    1. Silver should start to rise this week. It might spend a little time here to firm up, but it looks attractive.

      Delete
    2. Hi SC

      Would you be buying into silver long now then?


      Thanks!

      Delete
    3. I'm starting to build a position.

      Delete
  45. Hi SC

    If we are to bounce tomorrow, any target you looking for?

    Thanks!

    ReplyDelete
  46. I'm going to review and have some updated charts coming.

    ReplyDelete
    Replies
    1. Sc
      Do you see silver continuing to fall

      Delete
    2. No, some minimal downside is still possible, but not much. The upside looks great short term even if it comes down a little more.

      Delete
  47. SC, i think i picked up your second final spike in silver. Im wondering if we are seeing the same pattern. According to my interpretation this final spike should not exceed 37.50 high (may be a little around 38 but thats it) of this recent spike.

    The pattern im seeing started in august 2010, now we are replaying it on smaller scale starting from december low. Is this what you see?

    ReplyDelete
  48. I hadn't noticed that pattern. I see what you are saying. Looks good, interesting, thanks.

    Gold is starting to trade a little stronger now.

    ReplyDelete
  49. SC, Very grateful to you at all times for the analysis and study of silver
    I bought 33,price of SLV
    Will the March or April, SLV has the opportunity to rise to 37-38?

    ReplyDelete