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May Silver’s Precise Bounce Is Encouraging

By Rick Ackerman Posted on April 26, 2012, 3:50 am EDT Last Updated April 26, 2012, 1:53 pm EDT

Is the worst over for silver? From a technical standpoint, both the Comex futures and Silver Wheaton shares have done exactly what we might have expected of them if they were carving out a durable bottom.  On Monday, the mining stock came with a single penny of a 27.97 correction target where we’d told subscribers to get long using an 8-cent stop-loss. Then, yesterday morning, May Silver futures trampolined from a low that lay just 1.5 cents from a correction target also identified using Hidden Pivot analysis. In both instances, powerful rallies began from within a hair of the targets, raising the odds that an important low is in.  Our 29.940 price objective for the May Comex contract was flagged three weeks ago when the futures were trading above $31 an ounce.  Yesterday’s explosive bounce from 29.925 carried them all the way to 30.740 — an 81-cent surge that would have been worth $4000 to any trader lucky enough to have caught the entire ride.

As for Silver Wheaton, subscribers have been instructed to hold onto half of any shares they may have bought when the stock bottomed Monday at 27.96.  Yesterday, tracking the ballistic move in bullion futures, Silver Wheaton traded for as much as 29.79.  That represents a gain on paper of more than 8% in less than a week, since subscribers were told to take a partial profit near 28.61. With our cost basis effectively reduced to 27.47, we can afford to let our profits run. But will the move continue? It’s impossible to be sure. However, based on the energetic leap that these two silver vehicles have taken so far, we are encouraged to hold onto at least a small portion of our original position in Silver Wheaton for a potential four-bagger.  We should note in the meantime that the stock is not yet out of the woods, technically speaking. By our Hidden Pivot runes, SLW will need to rally a further $2.44, topping a peak at $32.20 recorded on April 12, to turn the daily chart decisively bullish for the intermediate term. At that point, we’d say there’s at least a 40% chance that the correction begun almost exactly a year ago is over.

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  • Cam Fitzgerald April 27, 2012, 2:41 am

    Sometime between now and early fall I suspect that both the Dow and S&P will meet their 2007 highs. The market is overbought and only HFT trading is able to keep it afloat on occasional thin numbers. Right about the time the prior highs meet I suspect Apple will finally hit 666 and the trigger for the sell-off will begin bringing on a crisis that sweeps the president back into power. It is just a crazy theory of course but I would keep a close eye on what insiders are doing over the summer months when many traders are trying to catch some sun and get out of the office.

    • Robert April 27, 2012, 5:27 pm

      I don’t understand what type of crisis could keep the current President in power… Unless he staged an outright coup, and you need the military’s support for that…

    • Cam Fitzgerald April 27, 2012, 8:37 pm

      I have no idea Robert. We are heading for some kind of brick wall though. Financial crisis part II does come to mind. So many charts are just terrible now and sending signals of serious discord building in the system. They variously point to excess, extremes, parabolic moves, worst bottoms of all time etc etc etc. The picture is not one of stability and calm but is telling us that troubles are mounting in the background. We just cannot know for certain what part of the machine will break first as a result. Have you seen the consumption numbers just posted for Europe and other parts of the world? Cripes, what is that saying? Certainly we should be worried about the sudden uptick in deflationary headwinds and we might keep in mind that next quarters earnings will be coming in below estimates in more than a few sectors. Gold meanwhile, is functioning as a commodity and not a store of wealth against financial instability. I am anticipating a significant broad market sell off as early as this autumn and will not be surprised to see miners track down along with all else much to the dismay of those who are holding out hope they are set for a massive imminent rally. We could be setting up for another of the great buying opportunities so we will have to watch and see what transpires. Something is going to give soon though and I now suspect it is coming ahead of elections. It may well light a fire under the electorate who will choose the known over the unknown and certainty over unexpected outcomes suggested by the plans of the opposition.

  • Jill April 27, 2012, 12:36 am

    The Supreme Court does what they want to, in response to their own political views. The Constitution is shredded daily. The only way in which they are a check on either of the other 2 branches is that they always are chosen for their political affiliation with the president who appointed them. So if the current president and/or Congress is of a different political party, then they oppose the presdent and/or Congress’s views. They are chosen as to be people who will “dance with the one who brought them.” And surprise, they always do.

    • mikeck April 27, 2012, 1:54 am

      Right on Jill,

      Well, almost always. If they really cared about “the supreme law” there would rarely be a split decision…after all it is written in English. Tell me again why I should vote for any of those criminals! It is all just another illusion to make us believe we have some say in how things play out.

    • John Jay April 27, 2012, 3:31 am

      Jill,
      True enough about the Supreme Court.
      However, I think that Obama’s disrespect towards the Justices during one of his State of the Union Addresses has not been forgotten by them. Justice Sotomayor is Obama’s girl all the way, but, she asked some tough questions of the White House Counsel about the AZ Immigration case. I was frankly a little shocked, I expected her to spout the Obama position. We will have to wait until their rulings on Obamacare and the AZ Immigration law come out to see if there is any glimmer of hope along those lines.
      For once I will be an optimist and hope for the best this time. It would be great if Justice Sotomayor rules against Obama on one or both of those cases.
      Perhaps rubbing shoulders with the other Justices will make her more responsible, or at least make her power mad and eager to show she is calling the shots now. I think I have to take a break from reality, it is too depressing. We need a small victory to keep up morale around here!

  • John Jay April 26, 2012, 7:05 pm

    Robert,
    Perhaps the Supreme Court will finally act as the Check on the other two branches that it was designed to be.
    They are at least talking the talk.
    As far as the US Military I have read that they are doing extensive recruitment of foreign nationals from all over the world. So it would depend on the make up of any body of troops to determine if they would or would not run roughshod over the populace if ordered to.
    Back to government finance. After an extensive review of the USPS that recommended mass layoffs and PO closures, the result? Congress is pushing through another bailout anyway! Vote buying with borrowed money yet again. In addition there are plans to create yet another Government Intelligence Agency. That will bring the total to 17 or 18 I think. Splendid, just what we need!

  • Avocado April 26, 2012, 2:22 pm

    Do you ever go back and look at how you have done in the past? Your one year anniversary is coming up on this prediction:

    http://www.rickackerman.com/2011/05/bullion-selloff-won%E2%80%99t-last-another-week/

    I think it lasted longer than another week. And that raises the obvious question, one that is always in the back of my mind. I remember back in the early 80’s when my father was working with Joseph Granville to put his trading methodology into software. (Stock Market Software, Inc. if anyone can remember that far back) Joe was the epitome of market predictors until he failed, as have many others who were perfect, then were not.

    So how reliable is Hidden Pivot in forecasting future trends? Is it limited to the short-term only? Or was your prediction in May, 2011 based on gut feelings only, and had nothing to do with Hidden Pivot?

    I quote, May 5, 2011:

    “From a technical standpoint, July Silver, currently selling for about 39.260, looks like it still has a ways to fall. To be precise, we see a turn from exactly 37.165, a “Hidden Pivot” support identified by our proprietary method of technical analysis. However, if that support is breached on a closing basis, we’d infer that still more weakness awaits to as low as 35.390.”

    It traded as low as $32 and change before staging a rally. It certainly has not recovered back to $50 or more.

    Are we seeing the early stages of yet another trading method beginning to fail because too many people are using it? I think that is what eventually happens to all trading methods.

    Remember, the market’s goal is to fool everyone into believing they know what they are doing. Countless very smart people have been losing fortunes in the market for thousands of years.

    Are we seeing a repeat of that?

    Thanks,

    Andy

    • edd April 26, 2012, 6:59 pm

      Andy, I also have wondered if Ricks method would begin to have performance anxiety if it became to popular. I have put aside those concerns as I have watched it consistently produce outstanding results. One important component of the system that many forget is not just targets, but a very tight, disciplined money management system. Losses are always held to a minimum. My personal observation and actual trading experience over the past few years has confirmed for me the continuing validity of Ricks concepts. I prefer to trade on the daily time frames. I ignore prognostications beyond next week. Often I will run into performance problems. Analysis has shown to me that my performance suffers when I get out of sync with the rythmn of the market. Prior experience has shown to me that if I adjust my trading to a different time frame, my performance improves. I have a tendency to want to “see” patterns that fit my time frame. This in no way reflects on the efficacy of the method, rather my own bias.
      Yesterday I used AGQ as a proxy for SI futures. I spent hours watching and waiting for Ricks silver tout to hit the equivalent target in AGQ. The SI price came within pennies of his tout. I entered the trade. My subsequent profits are still running on a trailing stop. If I had been wrong, my stop was .05 cents below my entry. Once again Ricks amazing, uncanny system works again!!
      I have recently adjusted my trading to the 10 minute charts. This has helped me to trade better then fight the up and down on the daily charts recently. The HP method has been invaluable to me by teaching me to “see” the trades I should not take. I trade less, and profit % is dramatically higher. Obviously Rick can speak for himself, but I believe the inherent simplicity and accuracy of the system is due to the aligning yourself with the ebb and flow of the markets. The ABCD waves swing thru timeframes like the natural flow of nature. Night/day, hot/cold, ying/yang. I do not see HP method as a gimmick or “system”. If an individual is undisciplined, lazy, and wants some sure fire system to trade with, he will fail quickly. Finally, as one who trades full time, I could care less what Rick or anyone else says a price may be next year. I don`t know anyone who trades on that time frame. If you have not taken the HP class, you owe it to yourself to do so, and I am not a paid shill but a very grateful former student and current subscriber.

    • Rick Ackerman April 27, 2012, 3:36 am

      Andy, you have no idea how stupid your questions sound to subscribers who pay for my forecasts (see edd’s note, above). It’s obvious that you know nothing of my technical methods, nor of their value to those who pay to look behind the sometimes scattershot speculation of the headlined commentaries.

      My predictions about what will be in a year or two are probably as good as anyone else’s, but my short- and intermediate-term forecasts are where Rick’s Picks separates itself from the hacks. Don’t take my word for it, though: sign up for a free trial subscription and you can ask my subscribers yourself in the chat room.

      Concerning Granville, I’ve always avoided his kind of grandstanding. If you achieve celebrity by predicting Big Events, your luck is going to run out sooner rather than later and your celebrity will quickly turn to notoriety.

  • John Jay April 26, 2012, 4:52 am

    Nice work Rick. Today was as choppy a day as I have seen in a while, I don’t know why we get those wild swings when the FOMC and BB are talking jive.
    ZIRP and rigged Treasury auctions won’t be coming to an end for years, and no one knows that better than the GS/JPM etc. crowd. Part of the farce I suppose.

    On my “Last Man Standing” dream, I have read that Argentina is preparing to do the big devaluation of their currency very soon. Just like ten years ago. I bet a lot of citizens down there have US dollars in foreign bank accounts, they really got screwed the last time.

    On the political front here at home it would seem there is some evidence that Obama and crew are at least a little concerned about Colonel Kurtz showing up at long last. I believe when Obama went to Annapolis for the last graduation ceremony at the US Naval Academy, ceremonial swords were verboten in the presence of the CIC. Recently, when SOD Panetta was in Afghanistan on March 14th, “Approximately two hundred Marines were told to leave their weapons outside a tent while listening to Panetta’s speech, but many state that disarming the Marines will lead to a morale problem due to a high official distrusting his own troops. Sources state that the Marines felt uncomfortable being without their weapons in what is essentially a war zone”. From Western Journalism.com
    Is this a manifestation of consciousness of guilt?
    At the end in the Fuehrer Bunker, even the highest German Generals had to leave their side arms at the door, and everyone was thoroughly searched.
    “History does not repeat itself, but it does rhyme”.
    Mark Twain

    • Robert April 26, 2012, 6:40 pm

      Make no mistake JohnJay…. Every person who enlists takes an oath. Many do not fully rationalize or comprehend what that oath truly means, but the ones at the top certainly do.

      NDAA is step one – any one declared a domestic terrorist can be detained.

      The courts will soon force the legislature to thoroughly and unambigously define what a domestic terrorist is, and if the definition they come up with is not constitutional, then those who swore to defend our founding document from all threats (both internal and external) will HAVE to serve their oath. They will have no other choice at that point but abandonment of duty (and perhaps they WILL abandon….. who knows?)

      The choice is narrowing down on them- either obey your CIC’s non-constitutional orders, or defend your oath.

      Some of the enlisted ranks already know this, and the Officers know it for damn certain…

      Oathkeepers.org

      Watch the Supreme Court’s proceedings regarding Arizona’s SB1070 legal battle. The Justices are already asking DHS and the DOJ why it is acceptable for Federal law enforcement (ICE, TSA, BP) to question any person’s immigration status when it is concurrently NOT acceptable for state & local law enforcement to do the same… These idiots are actually going to argue that Federal Executive authority supercedes the sovereignty afforded to the several states by the document that the states themselves ratified…

      Essentially, the Feds are arguing that the process of ratifying the Constitution was a contract binding the several states into Federal servitude – How does everyone expect THAT to play out?

      The Judges have the administration over a barrell on this one.

      “Do as I say, and not as I do” seems quite apt. Will the executive branch continue to get away with it?

      If they lose Obamacare in the court, and they lose the immigration fight with Az over SB1070, what will be next?

      My guess is that “suddenly”, the President’s legitimacy will actually (albeit slowly) begin leaking into the MSM. Forget the Birth Certificate drama, and forget the CT Social Security card – Go take a look at his Selective Service Registration card- the one that was NOT stamped with a full four digit year date code by the postal registrar’s stamp, which is not only unprescedented, it is fundamentally impossible. There is no such thing as a postal registrar’s stamp with a 2 digit year date code.

      Call me overly optimistic, but this guy’s going down… Like all snowballs, it will begin slowly, but the winds are shifting and it will soon be blowing down the hill; and all the community organizing, riots, and swarming of government buildings by misguided nintendo playing youth is only going to accelerate the emergence of the next underlying order that always arises out of all chaos.

    • Buster April 26, 2012, 7:10 pm

      Hi guys. I found the link below unsettling to say the least. How ominous it is I have no idea.
      Any thoughts?

      http://www.naturalnews.com/035649_DHS_ammunition_domestic_war.html

    • Robert April 27, 2012, 5:34 pm

      Buster-

      Chilling, indeed….


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