Scintilla Talks Silver

In which Scintilla tries to make money analyzing SLV and documents it for posterity. Assumes some knowledge of Elliott Wave Theory. I AM NOT A LICENSED FINANCIAL PROFESSIONAL. NONE OF WHAT I WRITE HERE SHOULD BE CONSIDERED INVESTMENT ADVICE.

[eagleargent]

20230129 - more multi-market musings

S&P500: I wrote two weeks ago that “only a sustained breakout past that channel would have me thinking of anything bullish right now”; well, there’s a good case to be made for that now being the case, after Jan. 18′s triple bearish engulfing was completely retraced and no gap fill sell signal ever materialized; all Ichimoku signs are bullish; that said, the 1-box P&F chart suggests a rather modest upside target of 4,150, and the 3-box chart suggests no upside target whatsoever, so this is probably not worth trying to trade unless there’s a pullback to backtest that trendline, say around the 4,000 - 4,020 zone with stop under 3,950

Crude oil: crude has been amazingly consistent in its failure to close above its Ichimoku cloud (there’s a flat cloud top at 81.91 and it’s there for the entire month of February besides); Friday’s session was a bearish double engulfing on the most volume we’ve had in a while and completed an RSI triple top; we have a pretty clear triple top in the 82.40 - 82.65 zone, with the traditional target being as low as 74.50; but to make it worth the risk, I need a deeper retrace than what we’re currently seeing premarket

Corn: is now showing all bullish Ichimoku signs but is also right up at resistance again; StockCharts.com says the 3-box P&F chart shows a price target of 765, but that seems a bit unbelievable; I’d like to see a pullback to the conversion line before trying anything here

Soybeans: made a small double bottom, but both that trough and the most recent peak have been below the channel lines, indicating a weakening uptrend; RSI and MACD have gone nowhere but sideways for the past three months even as the price has slowly risen, which does not inspire bullish confidence either; that said, all Ichimoku signs are bullish again; Friday was probably the time to go long if any (when it closed above the baseline on less volume)

Wheat: did not sustain a breakdown below support, despite the heavy volume down day of Jan. 23 that appeared to slice through it; currently sits right at the downtrend supply line from October as well as horizontal resistance from the Jan. 18 high of 760.25; still looks bearish until such time as the downtrend line is broken, but if that does come to pass, then it’s worth noting that it would make the Jan. 23 low an MACD/RSI divergence (arguably on the weekly scale as well!)

Silver: is still chopping sideways, but it’s worth noting now that we got four sessions in the past two weeks with heavier volume than any day since November, and they were all down days; MACD has been sliding for a month and a half, which is not bullish; RSI breaking below 49 could signal a selloff

Bitcoin: in my last update I was looking out for a gap fill buy signal, but much like the miracle in Phoenix Wright, the gap fill never happen; all Ichimoku signs are still bullish; this could be seen as five waves up from the Nov. 9 low, so I’ll be looking for a three-wave corrective pullback before trying to go long

TSLA: the target of 162 was met and then rocketed past; not sure why I did not go long on Jan. 19; that said, Friday’s session had the highest volume in two years(!) and certainly looks like a buying climax, so with any luck there will be a selloff soon that provides a better entry point; it’s also worth noting that we have now had three gaps up since the Jan. 6 low, which usually implies some backfilling to come

AMZN: 

the downtrend line from August is now broken, even if not particularly flashily so

we’re coming up on resistance at 105 again

it’s now fairly obvious that the Dec. 28 and Jan. 6 bottoms were significant RSI/MACD divergences on both the daily AND weekly scales, as well as lining up horizontally with the March 2020 low!

traditional upside target for the presumed bullish flag pattern would be right around 109, or close to the top end of the  big October gap

on a longer view, upside target for the double bottom or head-and-shoulders with the neckline at 105 would be 128

given the big divergence (last time it happened was last summer, and on the weekly chart I’m having trouble finding any examples -- 2014-2015 maybe?), I may just go long anyway, especially if there’s a pullback

in retrospect Jan. 10 was the day to go long, as it confirmed the gap up from the Jan. 6 bottom and that big divergence (even if on low volume) and also saw RSI break convincingly above resistance

[eagleargent]

20230116 - notes on various markets

Crude oil: 

today’s low-volume session created a dark cloud cover right at the bottom of the Ichimoku cloud

cloud is solidly bearish but the price has crossed back and forth over the base/conversion lines thrice in the past month

triangle forming since beginning of December?

reasonable downside target is 73.50, which is over 3:1 if stop at 80.25 above the dark cloud cover

problem is that /CLG23 is going to roll over soon, so we should be following /CLH23 instead, so move the target to ~74 and the stop to ~81, which does not quite give us 3:1 anymore

Corn:

rocketed to the top of its Ichimoku cloud on Jan 12 on the heaviest volume in 3 months, then cleared the (flat) cloud top on Jan 13

conversion line is above base line, and price above both (and the cloud), but cloud is still bearish (albeit barely)

lagging span is in the middle but is not too far from breaking out to the top

last swing high was 685, not at all far from current 675.75 -- triangle forming?

no clear trade setup ATM; maybe if it breaks out the lagging span and then retreats to the cloud top at 671?

Soybeans:

All Ichimoku signs are still bullish, but I just got done taking the easy money on this one, and it’s in a possible resistance zone; no clear trade setup

Wheat:

clear support zone at 720-725 stretching back to August; fairly obvious descending triangle; if support breaks, traditional target would be 500 (oof!)

fairly decent volume coming in at the most recent bottom, but is it accumulation or just absorbing demand from before?

all Ichimoku signs are bearish (lagging span is not quite at the bottom but still very close)

might be a shorting candidate if it rallies a bit more on weak volume (or if it just breaks down through support)

Silver:

has been chopping sideways in no-man’s-land for the past month despite all Ichimoku signs being bullish that whole time; certainly looks like five complete waves up from October, but I see no signs of any sustained downward correction

Bitcoin:

on Jan 12 I noted on my chart that the 1-box point-and-figure chart was giving a target of 21,000; that target was promptly hit in today’s low-volume session, which was a huge gap up that turned all Ichimoku signs bullish

Ichimoku cloud support is all the way down at 18,163, which is a bit far to be useful

but look out for a possible gap fill buy signal

S&P500: has just about gotten all the way back to the top of the downtrend channel that started with the all-time high a year ago; only a sustained breakout past that channel would have me thinking of anything bullish right now (admittedly, getting back to it after not even having dropped to the halfway point from the last channel tag in December is a promising first step for bulls, but it’s not enough just yet)

TSLA: continues its month-long run of high volume, but is there enough of a basis for a sustained rally yet?  The 3-box P&F chart says bullish target of 162, which is just above the tops of Dec 14/15/16 and underneath the support of Nov 22; a tight stop under the recent lows at 112 (since bears haven’t been able to fill the Jan. 6-9 gap) would give a 4:1 ratio at current price

AMZN: 

has had two gaps up in the past week, with very little retracement -- if there’s a third, especially if it doesn’t break past resistance at 105, then that could be a selling opportunity

last session was the fourth tag of the downtrend line that dates from last August, and the rally so far hasn’t come close to enlisting the kind of volume that was seen in the Oct-Nov meltdown, so even a bearish reversal directly here would not be too surprising

[eagleargent]

Anatomy of a successful trade: soybean futures

January 6: I notice that soybean futures (/ZS) have been in a shallow uptrend for three months, most recently having a three-day selloff from a high of 1,537.5 to a low of 1,465 (in what had been a narrow congestion zone in December), followed by a one-day bounce on decent volume that was essentially a bullish engulfing candlestick, to close at 1,492.  This is what the daily chart looked like at that point:

I note further that the Ichimoku indicators (not shown for legibility) are almost all bullish:

cloud is green

conversion line is above base line

lagging span is the highest line on the chart

And the Jan. 6 bounce kept the price securely above the base line, which it hadn’t been below for over two months, so it seems like a possible buying opportunity.

But I don’t buy yet, because the risk/reward ratio is not good enough: based on the chart, I can only justify expecting a rally to about 1,525, which is about as far from the closing price of 1,492 as the most recent low where I would need to put my stop loss order.  1:1 isn’t enough.  So I wait for a pullback that would improve that ratio.

January 9: Soybeans trade higher, eventually getting as high as 1,501.75 in the overnight session, before pulling back... to 1,490.  Naturally, this is still not enough to get me to buy.  However, I do notice that the previous three-day selloff looks far more corrective than impulsive (hourly chart below), leading me to believe that it will be retraced completely or nearly so:

I resolve to continue watching soybeans for the pullback I want to see.

January 10: I get to my computer around 8:30 AM, and the hourly chart now looks like this:

With soybeans now trading at 1,477.5, my target of 1,525 is 47.5 points north, while I would be setting my stop at about 15 points south -- a ratio of better than 3:1.  This is the opportunity I have been waiting for, and I buy the E-mini contract at 1,477.375 shortly before the premarket session closes.

(My records show that I actually set the stop at 1,473, which was right below the overnight low that had just been established, meaning I actually had a ratio of more like 10:1 -- I’m guessing my reasoning was that any pullback that took out the overnight low was likely to keep going and wipe out the entire two-day rally anyway, and/or that any new low would make the decline from Jan. 9 look like a five-wave impulse and therefore bearish.)

As the clickbaiters say, “you won’t BELIEVE what happened next!”

Yup, as soon as the opening bell rang that morning, we were off to the races and never in danger of tripping my stop.  Over the next two days I pulled up my stop every time soybeans safely made a new high, until today when it tagged my target of 1,525 (actual high: 1,527) and then retreated into a consolidation zone, which is when I decided I had had enough of worrying and would take the easy money and run, selling at 1,518.75.

(In general I’m trying to do more of such “making the easy money”, being patient about my entrances and favoring quick exits.)

Nominally that’s 2.8% in two days, but it’s effectively more than that because of the leverage inherent in futures contracts.  Now I just need to reproduce this kind of success on the regular... and gain enough comfort to increase my lot sizes.

[eagleargent]

20220901

In my last post, I wrote:

One zone in which to look out for a bottom would be around the flat Ichimoku cloud bottom at 3907, which conveniently is not far below the traditional target for the presumed head-and-shoulders top formed by the price action in August.  (Edit: And it also lines up nicely with the shallow uptrend line formed from the bottoms in June and July!  If bulls want to prove that the June-August rally wasn’t just a bear market rally, holding this level would be well advised.)

And what do you know, in today’s session S&P 500 proceeded to bottom at 3903 before reversing and filling the opening gap, on the highest volume we’ve seen on an up day in a month.  So that warning proved quite timely.

Naturally, I exited my short position about 15 minutes before market close, for a gain of 11.7% in under a week (because I was using a leveraged 3x short ETF).

[eagleargent]

20220831

Some random market thoughts, starting with S&P 500:

The study at the top of this chart is RSI(14), showing an overbought reading that coincided with the advance block candlestick pattern formed by the price action of 8/12, 8/15, and 8/16, all on a significant drop in volume (showing that buying interest was being exhausted).  Despite all Ichimoku signs having turned bullish on 8/12, what happened since then has shown that 8/16 was in fact a fairly significant top.

The gap down on 8/22 that pretty well cemented that top not only broke the support line of the previous month-long advance (dashed blue on the chart), but it also brought S&P 500 below its Ichimoku conversion line, which it had been above for the whole rally and now has stayed below ever since.  Additionally, all of the down days since that 8/16 top have produced higher volume than all of the up days.

It’s fair to ask if the current decline has run its course.  The volume spike of today’s session could be seen as climactic -- except that the last session of every month for the past few months has also produced a similar spike, so I hesitate to draw any conclusions from this one.  But as I type this, the E-mini futures are down another 0.6%, so I have to assume the decline is continuing until we see some evidence to the contrary in the price and/or volume.

One zone in which to look out for a bottom would be around the flat Ichimoku cloud bottom at 3907, which conveniently is not far below the traditional target for the presumed head-and-shoulders top formed by the price action in August.  (Edit: And it also lines up nicely with the shallow uptrend line formed from the bottoms in June and July!  If bulls want to prove that the June-August rally wasn’t just a bear market rally, holding this level would be well advised.)

As for myself, I went short in the middle of the long down day that was 8/26 and will probably be looking to take profits soon.

  And now for *sigh* silver...

(Please ignore all presumed wave counts on this chart, as they have clearly been invalidated.)

There is not much to say here.  I thought we finally had an impulsive rally up from 18.01, and yet here we are with still another new low.  But so far, this low has not been confirmed by RSI or MACD; add to that the yellow note on the chart, and we have the potential for a three-point divergence from the lows at 20.42, 18.01, and wherever the new bottom comes in.  That plus breaking out of the purple downtrend channel ought to form the basis for a decent rally if/when it happens.

But until then, all Ichimoku signs are bearish, the price has been below the cloud ever since 8/16, and nothing has happened yet in the price or volume to suggest that the bearish energy is running out.  I do not plan to buy until something significant changes.

[eagleargent]

20220518: Thoughts on various markets

It’s been a while, huh?  Here’s a quick update before I forget what I’m thinking.

S&P 500

The rally of the past few days stalled out at C = 0.618*A (which converged nicely with the downtrend channel line established by the last top and two bottoms, orange on the chart below) and dropped like a lead balloon in today’s session, ending any thoughts of the rally being impulsive.  The whole rally was on very weak volume, so this is not too surprising.

I have gone short with a stop above yesterday’s high, but only with a small lot: if we get a corrective retrace, I’m prepared to add to that short position.  The stop is as tight as it is because, if this crash channel breaks, a rally back to the 4600 zone would be very possible.

It’s worth noting that the Ichimoku picture on S&P 500 shows all signs bearish and has since about April 26.  I’m seeing similarities to May 5 which had a similarly strong decline after a brief close above the conversion line.

I’ve identified the 3520-3540 zone as a downside target (I think this was based on the P&F charts), probably in early June if the downtrend channels hold up.

Crude oil (/CL)

Crude oil’s monster rally topped out on March 7.  Since then we’ve had a drop followed by a sideways movement; this looks best to my eye as a complete I-II (or A-B) that ended at yesterday’s high of 115.56.

In any case, once the morning’s action showed a decent downward momentum, I got short to scalp the drop, closing out when oil hit my downside zigzag target (in purple) converging with the oversold line of the crash channel and bounced... except that I accidentally closed out only half my position, which ended up being a happy accident when crude continued to power lower.

I now expect a trip to the bottom of the shallow red uptrend channel, if not even lower, before any revisiting of 115.56.  This is supported by the renewed volume that accompanied today’s drop.  If this is in fact the kickoff to a big III/C wave, then the first target zone would be C = A at 80-84.

Wheat (/ZW)

I had thought that wheat was in a similar situation as oil, with a shallow corrective rally channel... and then it powered out of it a few days ago.  The candlesticks and volume certainly give yesterday’s tag of 1284 the appearance of a significant top, but it’s hard to make any significant bearish bets until and unless it drops past 1135 -- and even then you would really prefer such a drop to be clearly impulsive, to quash the bull nest possibility.

Soybeans (/ZS)

Soybeans have consistently found support right around 1580 and currently appear to be ending an impulsive rally.  A three-wave decline on weak volume could be a buying opportunity for a trip back to the 1750 zone; I am not willing to say anything bolder than that absent a lot more time and analysis.

Bitcoin (/BTC)

If we view the entire move down from last November’s all-time high, then this looks like a zigzag that still needs 5 of C down to be complete.  On the log scale, C = A at around 23,000.  But on the nearer term chart, there is nothing to suggest that the current bounce is over yet.  A trip back up to the gap around 34,500 would not be out of the question for this pattern.  If we get back up to the 37,500 zone, only then would we have to start thinking that maybe the May 12 bottom was the entire zigzag.

Silver (/SI)

Oh yeah, this is the market you’re probably here to read about, right?

Here’s the weekly chart of silver (I used the e-Micro for this so it wouldn’t be clogged with my annotations), just to show you how much of a mess this has been for almost the past two years now.  It seems to be some sort of messy complex correction, but I’d hate to put money on specifics or whether it is over at this most recent low.

On the daily chart, at least the decline from the March 8 high (which coincided with the peaks in crude oil and wheat!) paints a somewhat clear picture.  The 20.42 low was most likely wave 3 of an impulse, and that means we need wave 5 down to complete the move.  Any rally above about 24.00 would KO this.

Zooming in further to the hourly chart, we see an apparently impulsive shape for the rally, though it was on weak volume.  Bears had a chance overnight to get a nested decline set up, but now I can only see the decline as a corrective one.  The purple and cream targets are C = A for the zigzag and the 38.2% retracement of the rally respectively; they landed within a cent of each other, and today’s price action came within a cent of that while retaining the corrective look.

If ((b)) is in fact over, then ((c)) = ((a)) at 22.87, before things presumably drop again for wave 5.  Again, bulls could knock out that count, and create a very real possibility of the 20.42 bottom being the beginning of that long-awaited monster rally I’ve been keeping in the back of my mind for months, by taking it up to around 24.00.

And this is why I don’t update more often: this took over an hour and it wasn’t even really that in-depth.

[eagleargent]

why does your blog show up in the monster high tag 😭

Considering I have never to my knowledge mentioned Monster High or anything adjacent to it on this blog, I really couldn’t say!  Unless “SLV” or “silver” means something particular in that franchise... anyone have any ideas?

[eagleargent]

20220207 A.M.

Stopped out of my silver position for a tiny (0.5%) loss -- my position was not large in the first place.

[eagleargent]

20220201

Today was not the clear bearish reversal in S&P 500 that I had been looking out for, as a late day rally took the index clear of the 4,520 - 4,530 resistance zone I had identified in my last post.  If bears want to get the ball back, they need to make a stand soon and produce a convincing selloff, because there’s not much room left before the key overlap at 4,582.

Light sweet crude oil continued to bounce around in the range that has contained the past four trading sessions.  However, its manner was decidedly more bullish today and yesterday than in the first two days of that range.  So a breakout towards the 93-94 target zone identified in my last post seems a bit more likely now.

Soybeans just powered right past the 1,490 resistance zone and out of its previous uptrend channel, and I’m not even sure where the next target would be.  Still looking for a fourth-wave decline as a buying opportunity.

Finally, silver showed me enough this morning for me to take a position, shorting SLV at 21.03½ with a tight stop above the early morning high.  Currently +0.5% on it, looking to meet or exceed the 20.48 low from Friday (equivalent to 22.15 for /SI).

[eagleargent]

20220130 (other stuff)

Silver hasn’t yet given me the corrective rally I was planning to short, so here’s some other stuff of interest instead.

As far as the S&P 500 goes, Friday’s session marked a large rally that closed well out of the downtrend channel of the past few weeks.  But from a strictly Elliott wave perspective, it’s still hard to see this as anything but an impulse in progress that still needs a fifth wave down; bulls would need to approach the key overlap of 4,582 to get me off that train of thought.

Moreover, all Ichimoku signs on S&P 500 are now bearish since January 21.  The last time that happened was February 27, 2020, which was already over 12% off the high.  We all remember what happened next: a further drop of 26% as the pandemic took the world by storm.  (Before that?  October 2018, presaging a further 14% drop in December 2018.)

There’s a zone of 4,520 - 4,530 that contains the Ichimoku base line resistance, the C = A target for the current rally from 4,222, and prior support from 12/20 and 1/19; a rally into this zone would be short enough of 4,582 that a fifth wave down would still look plausible.  I will be watching that zone for bearish reversal signs.

Second, light sweet crude oil (/CL):

Assuming I have correctly identified wave 4 of this impulsive two-month rally (assuming it’s not just wave iv of 3 of it), then the Fibonacci targets line up in the 93-94 range.  However, the increased volume in that fourth wave, plus the long shadows on the past few candlesticks, has me thinking that the end might even come sooner, which is why I’ve drawn the support line now.

Any convincing break down through that support line (and preferably also through horizontal support at 86.25) would seem to me a decent idea for a short, even more so if 81.90 falls and the decline still looks impulsive.

And lastly, soybeans (/ZS):

As you can see, the Fibonacci targets for this one lined up in the 1453-1458 zone, but soybeans continued past that point.  The red 1490 level is horizontal support-turned-resistance from last April and May, and we’ve just about reached both that and the top of the uptrend channel.  

From an Elliott wave perspective, the rally would look better with one more low-degree fourth wave and fifth wave up, plus there’s nothing yet in the candlesticks or volume that would indicate an imminent downturn.  At present, only if we overlap the presumed wave i of 5, at 1429½, would I begin to suspect that the rally was truly over.  (So on any corrective-looking decline short of that level, I would consider a short-term long position to at least match the previous high.)

______________________________

And as for silver itself, the action of 1/28 saw silver futures break below the two-month uptrend line starting from the second 21.41 low but then close right back above it (long lower shadow).  I’m not so concerned with figuring out silver right now, not until it makes a clearer picture; rather, I need to learn from what happened last week.

(I didn’t lose money on my long position, because I did end up chickening out and dumping it near market close on Thursday, 1/20, very close to the high, for a 4.6% gain.  Hey, maybe that means my closing timing is improving!)

It’s become clear that I should have shorted on Wednesday, 1/26, when the Fed made some sort of announcement in the afternoon and silver tumbled in the final two hours before market close, instead of waiting for a corrective rally that never materialized.  Why?

1/26 marked a sharp, high-volume break down from the trading range silver had been bouncing around in for the past two trading sessions -- especially notable since silver rarely sees much volume in the afternoon.

Futures reached a low of 23.47, which was very close to the key would-be-wave-1 overlap of 23.34½.  I should have realized at that point that there was no longer (almost) any way bulls could make a convincing impulse out of the rally from the 1/7 low of 21.94½.

Furthermore, I should have realized that if the rally had indeed been locked into three waves, all but locking the entire rally from the December low of 21.41 into three waves as well, then given the steep, impulsive look of the November-December selloff from 25.49, there was a good chance we had a perfect setup for a wave 3/C decline -- which, of course, tend to be some of the most powerful of all.

So in other words, next time a reasonably sharp top/bottom comes close enough to a key wave-1 overlap that it calls the impulsive shape of the preceding rally/decline into serious question, AND a further decline/rally would be in a high-degree wave 3/C, I should jump in without waiting.

... Phew.

[eagleargent]

20220126

Silver futures have now broken below $23.34½, all but locking in the December-January rally (from the second 21.41 bottom) as a three-wave move.

The only bullish options left are: (1) a bull nest, or (2) an expanding leading diagonal (rather rare).  Both of these options would require bulls to break back above 24.75½, so watch that zone (mint green dashed line on the above chart).  If we rally back toward that area on weak volume with a corrective look, I just might take up a short position.

[eagleargent]

20220120 A.M.

In my post last night, I wrote on silver:

Additionally, today’s rally took us to the traditional target (C = A) for the advance from 21.94 if it is a zigzag.

Well, this morning’s action has taken us well beyond that target, blowing silver securely out of the shallow uptrend channel it was in (starting from the Dec. 15 low of 21.41) and lending credence to the idea that this may not be just a corrective rally after all.  The hourly chart follows:

Yesterday’s rally (wave 3 on the chart above) was longer than the previous day’s rally (wave 1), if just barely, so there are no restrictions on how long or short wave 5 can be.  However, one zone to watch is 24.90 - 24.95, which provided important resistance twice in the past few months (Sep. 3 and Oct. 22), plus it contains 24.93 (in cyan on the chart), the point at which the bottom of wave 4 would equal 61.8% of the entire move.

Of course, if the rally shows clear signs of stalling into distribution before that, or if we get a sudden steep down move with volume, then I don’t intend to wait to close my position.  As I said, wave 5 can be as short as it wants.

[eagleargent]

20220119

First update in a good while, I know.

Let me begin with the broad market, using the S&P 500 ($SPX) as a proxy.

The indicator at the top is the standard RSI(14), but plenty of other oscillators (MACD/PPO, MFI, OBV) are all showing the same thing: the January 5 top was a divergence, on the daily and weekly scales.  Added to that is today’s decline pretty clearly breaking a major support line that goes back to May of 2020.  To top it off, the Ichimoku picture is hanging by a thread, as the cloud is on the verge of turning pink again and is not currently providing any meaningful support.

(And for another bearish sign, the Dow Jones Transportation Index failed to confirm the Jan. 5 high in S&P500 and the DJ Industrials.)

If this doesn’t turn into a whipsaw and get back above the support line pretty directly, a trip to 4,300 seems reasonable.

Now silver, on the other hand...

I got long silver on Dec. 16, the day after the 21.41 bottom (which exactly matched the bottom from Sep. 29!), therefore reasonably close to the bottom of that move.  Somehow I still managed to take a small loss over the next month (less than $100 total), due to what might have been an overly aggressive stop.

But the massive volume increase and rally in yesterday’s session was too much to ignore, especially after the modest two days’ correction to the rally from 21.94, and I got long again.  That position is currently up 3.3%, and I like my chances if the flat cloud top in the chart can provide support.  As you can see, with the lagging span breaking out to the top spot today, all Ichimoku signs are now bullish except for the color of the cloud itself.

However, the longer-term Elliott Wave picture in silver is still a confusing mess I have not sorted out.  I cannot rule out the possibility that the three waves we have so far up from the Dec. 15 bottom at 21.41 are just a double-three correction (to the Nov-Dec selloff from 25.49) that is now approaching its end, especially since what would be the W wave of that, namely the Santa Claus rally from 21.41 to 23.48, still looks like three waves to me.  Additionally, today’s rally took us to the traditional target (C = A) for the advance from 21.94 if it is a zigzag.

So, out of caution, I moved my stop up to just below that 23.48 mark.  Because if that falls, then the only bullish interpretation left would be an expanding leading diagonal, which would be rare (and also would give another buying opportunity on the inevitable correction).  Also I will remain on the lookout for price and volume signs of a top, because I lost out on a huge gain in November by not recognizing the 25.49 top (despite its slow, round evolution giving me plenty of time to do so!) and I don’t wish to repeat that experience.

But until such signs materialize, I won’t just take my 3.3% gain and run -- because if silver keeps running upward and doesn’t sniff 23.48 for a while, then we might just finally have that big monster rally I’ve been waiting months and months for.

[eagleargent]

So uh, quick update I guess

So obviously if silver futures (/SI) break below the Sept. 29 low of 21.41, then everything I said about us being in cycle III up is off the table.

Today’s continuation of the decline (the 9th straight session with a lower close!) has brought it beyond what we would expect for (C) of a flat ((2)), so I felt that a warning was in order.  At this point, the bulls need to reclaim 23.77 before we can have any real confidence that the decline is over -- and if they don’t do it in an impulsive fashion, it won’t do much to convince us that it’s not just a corrective rally.

It’s also worth noting that all Ichimoku signs turned bearish this week except for one, namely, the cloud itself.

(But those of you who remember from my previous posts that I was long silver on the way up may be glad to know that I successfully followed Buffett’s first rule of investing, namely, “don’t lose money”.  My entry point was good enough that I realized a minor profit even from the stop losses getting triggered.  Still, by the end of Nov. 16 there were enough clues that a selloff was imminent, and I should have gotten out then and been happy with catching the rally of those 1-2 weeks.)

[eagleargent]

20211104 A.M.

It’s been a while since my last post.  Late in yesterday’s session I doubled my long position in SLV while also tightening my stop, and here I will explain why.

In my last post, I noted that the traditional target of 24.87 in /SI for the bullish head-and-shoulders reversal had been met.  As it turned out, that was very nearly the high of the whole rally from 21.41, as we got no higher than 24.92 before reversing downward.  Between the target having been met and the existence of prior resistance at 24.94 (from back in early September), this decline was not a surprise.

To recap the bigger-picture context, the break over 23.36 in October was the first sign that cycle III up could finally be happening, so viewing everything through that lens, I expected the decline from 24.92 to be corrective and its end to mark a great buying opportunity.  Therefore I was on high alert for clues that the decline might be ending.

There were a few factors that led me to increase my long position yesterday on the thesis that this selloff is now over.  First, the daily chart (with volume exaggerated for visibility):

I could see that yesterday’s session was forming a hammer with a rather long handle, and on the heaviest volume since the 24.92 top.  This was one indication that a reversal might be imminent.

Combine that with what I saw on the 4-hour chart above, namely a move that had the right proportions for a zigzag, and it was enough signs for me to get long and move my stop up right underneath the presumed end of wave ((2)).  If I’m wrong and the decline is not in fact over, I’ll be stopped out as soon as possible.

And then this happened overnight.  The 20-minute chart above shows that not only did the rally from 23.04½ form a very nice impulsive shape, but also the subsequent overnight correction formed a textbook zigzag (right down to A being steeper than C) that also hit the 38.2% Fibonacci retracement right on the nose!  You could not ask for a nicer prelude to a third wave.

From an Ichimoku perspective, all signs have not yet turned bullish (the decline kept the lagging span from breaking out above the other lines), but today’s action should end with the price breaking above the cloud, which itself is also still bullish.  The cloud has a flat top for the next few weeks at 23.75 (or 21.95 on the ETF, SLV), which should theoretically serve as strong support.  But based on the above chart, we’d really rather not see an overlap of 23.76 (unless it turns into a bull nest).

Oh, and one more thing.  Going back to the daily chart above, you can see that we might have a bigger head-and-shoulders bottom on our hands, with the first shoulder being the red “or (A)” bottom, the head being the 21.41 bottom of wave II, and the second shoulder being yesterday’s wave ((2)) at 23.04½.  (I discount the depth of the first shoulder because it happened in the first hour of a wonky Sunday overnight session and reversed within that same hour.)  The neckline is obviously formed by the two tops at 24.92 - 24.94½.

If the pattern completes with a convincing rally past that neckline, that would put the traditional target right around the 28.44 level that was established as resistance back in June.  Stay tuned!

[eagleargent]

20211014

In my last post, I wrote that the first thing silver had to do to convince me that the longer-term trend had finally changed back to upward was to break over 23.36 (futures, or /SI).

Well, that’s just what happened this morning.  So I got long at 21.63 (SLV, the ETF) and it is trading at 21.82 as I type.  So far, so good.  The volume, also, since the  21.41 (futures) bottom on 9/30, has been just the way you would want to see it to support a bullish thesis, coming in strongly on up days and significantly lighter on down days.

From an Elliott wave perspective, the structure of the rally appears too muddled right now for me to be comfortable drawing any conclusions.  So for now I will turn to traditional technical analysis and note merely that the bullish head-and-shoulders reversal pattern completed by today’s session gives us a first target of 24.87 (futures), which should roughly correspond to a SLV target above 22.80.

Also check out this 4-hour chart of /SI, which shows that further rallying here would break a downtrend line that started back on July 6:

[eagleargent]

24.87 target claimed (as I type this, the high so far is 24.89)!  The rally has been doing everything it needs to so far to assume the look of a new major impulse up, including enlisting heavy volume on the up days.

And from an Ichimoku perspective, price has entered the cloud (the ETF has broken past it) above the conversion line, the conversion line is still above the base line, and the cloud itself has finally turned bullish (if just barely).  If the lagging span breaks out to become the highest line on the chart (which would require about another dollar per share of advance), all signs would then be flashing bullish.

For futures (/SI), I have a preliminary support line at 23.62 and will probably add to my long position on any decline back to that zone, as long as the volume on such a decline is weak.  (As noted in the post above, I got long on 10/14, the day /SI crossed the crucial 23.36 mark; that position is currently up 5.7%.)

[eagleargent]

20211019 A.M.

Heck yes.  “The ascent is proceeding as expected,” as Owl might say*, and making me glad I bought a call with close to 100% delta (price sensitivity) and 0% theta (time decay) yesterday, when it looked like the decline was going to end up a zigzag, which it then did.  (The above is the four-hour futures chart.)  

The rallies have been in an impulsive, trend-defining manner, and the pullbacks have not, which is just what you want to see to support a thesis of wave II down being over.  The heavier volume has also been on the up days.  Additionally, if today’s rally holds, it will be a clear breakout over the downtrend line stretching back to July that I identified in my previous post (the upper grey line on this chart).

From an Ichimoku perspective, price is above the conversion line, which is above the base line (bullish), but the cloud is still bearish and the lagging span is still the lowest line on the chart (bearish).  I can see a world in which this latest thrust up is (5) of ((1)) of III, giving way to a corrective decline for a few days.  But as long as said decline doesn’t go all the way back below 21.41 (preferably not much below 23.00), and as long as it does have a corrective nature, my thesis remains valid.

* I would like to take this opportunity to point out that, in the original Pooh books, by A.A. Milne, Owl was the only character who actually lived in the Hundred Acre Wood, as that name was given only to a certain section of the greater Forest (which didn’t have a more specific name).  But Disney appropriated the name for the entire setting, probably for marketing purposes.