Monday, August 20, 2012

Four Conventional Charts

SILVER 

Silver, which can be quite explosive when in a bull run, is showing signs of having established a significant bottom. The correction from the 2011 high has taken 50% of the duration of the 2008-2011 rally. If--repeat--if, new leg is about to commence in earnest it could easily take prices to the $75.00/oz level.

XAU Index 

THe Philly Gold & Silver Index is in the midst of an intermediate cycle rally and may test the 165-170 before any significant correction would ensue. Minor down trend lines have been broken to the upside and the previous double peak  at 170 is within striking distance. The index often leads metal prices and this current rally could be a harbinger of a more powerful rally in the metal markets.

TLT 20+ Treasury Bonds

The bond markets fell apart in accordance with the geometric charts that were featured on August 7 and  July 29. This is an ideal spot for a short term low for the following reasons:
  • 50% retracement of the previous rally
  • Testing the 200 day moving average
  • Testing the uptrend line emanating from the March 2012 low.
  • RSI is near over-sold.
The expected bounce from here is of paramount importance because if after a rally prices once again begin to decline and subsequently break the recent low, a MAJOR SWING PIVOT will be violated which will STRONGLY SUGGEST a secular low in rates has been made. A long term short position in bonds could be EXTREMELY PROFITABLE if this were to occur.

Dow Transports

The Transports have reached the downward trendline of the converging trendlines that were featured in the August 14th update and the cycle lines that were presented in the  August 7th geometric chart. The RSI is approaching over-bought but is not in a position that would indicate that the rally is over-extended by any means.
There are many cycles coming into play in the next 10 days--both short-term and long term--that could establish the character of the financial and metal markets for the next several months--or possibly years. If there was ever a time to be vigilant of market action: IT IS NOW!!!!!!

3 comments:

Monty said...

I agree with your price target of 75$ for silver. I've thought that for quite a while now. It's nice to hear someone else echoing my thoughts.

Anonymous said...

I like your price target of $75. I think it will get there. I've thought $80 silver for a long time now. Thanks for agreeing with me.

Fibocycle said...

While $75 seems like a good harmonic target-- +50% from the high and approximately 3X the recent low it wont get there overnight and the ascent wont be without harrowing market corrections. $75 is a nice target to have BUT the level that should be of concern for traders is $25.00. If silver trades below $25 the picture changes dramatically. Therefore any bullish strategy should concentrate on the $25 level to ascertain risk parameters of the trade campaign. It is proper management of risk that generates gargantuan gains--the targets are secondary.