Silver: A 26 Handle Is Not Out Of The Question

Includes: SLV
by: Avi Gilburt

Well, the "manipulator-in-chief" has struck again. I was sitting around in my bunker in Maryland, and was a bit bored with the action in the silver market. So, I decided that I wanted to see a decline this past week, as my lower targets seemed quite lonely and my bankster friends were not able to take us over the 32.15 resistance level. So, on Monday, I called my "friends," and had them take the market down on the way to our target box. And, as you saw, they were more than happy to comply.

This evening, as I write this article, I received a call from the "cartel" asking me if I want them to continue this decline in the metals. I told them that I do, and I do not want them to stop until they reach at least the 28 region.

If you remember, last week, I told the Seeking Alpha audience, who get a front seat view into the manipulation "cartel," that:

"if silver does not exceed the 32.15 level in the futures, it can still begin a strong decline, which, if it breaks 30.50, will be targeting the mid 28 region at a minimum, as I have discussed in my prior articles."

So, while many commenters, as well as other Seeking Alpha "analysts" have vociferously maintained that silver will not see break below 30 again in 2013, and that the bottom is in, I have consistently maintained that lower levels were still quite likely, and I still maintain that we will likely see a 28 handle next, and potentially the 26.87 level next if we are able to break down below the 27.90 level in the futures. In fact, the 22/24 region is still not out of the question.

While many of you have questioned why I was uncertain that this decline would begin immediately, or if it may take a little longer, allow me to explain. From an Elliott Wave perspective, I labeled the prior consolidation as a wave 2 of minor degree. But when the pattern morphed into a triangle, it made me become much more cautious, and it made me consider that one more push higher may yet be seen before this decline took place. This is because triangles are rarely seen as 2nd waves, and it made me much more cautious. But, the 32.15 level would have had to have been breached for the higher possibility to have become a reality. But, as I said, lower levels were still highly likely. So, ultimately, my cautiousness last week was for those with very short term put options.

At this time, I want to note that the COT shows that the commercial traders have added to their long positions, so this does provide some more evidence of a bottom that is approaching. But, as we know, COT information cannot be relied upon to tell us exactly where that bottom resides. But, it does mean that one should have appropriate stops on any short positions they own.

From a technical perspective, one of the reasons I see even lower levels as likely is that significant bottoms in silver are most often accompanied by positive divergences being displayed on the daily chart. No such divergences are now evident on the chart. While it is always possible that a low can be made without such divergences, I will err on the side of the higher probabilities, which would need a positively divergent low.

As an aside, for months now, I have attempted to dissuade readers from paying any heed to the "manipulation" theories that are proffered by those who do not understand how silver moves, and who are always caught on the wrong side of the trade. They feel that silver can only go up based upon their "fundamental" analysis, and they parade before us every reason under the sun as to why silver simply should not be going down. And, when it does, then it is not because they are wrong, as they are simply to smart to be wrong, but it must be that the market is being manipulated.

In fact, one comment I received actually claimed that the "manipulators" cause the CME to reduce the margin requirements so that it is easier for them to run the price up, only to pull the rug out from under the masses when they heavily manipulate the market back to the downside.

So, based upon the perceived game plan within this "manipulation" theory, didn't the CME just reduce the margin requirements? Yes, yes, they did. So, of course, the next play in the "manipulator" play book was to take the market up, up and away. But, wait a minute. Didn't the market just go down?! Did the "manipulators" get the play wrong? Was there an audible called?

And, as part of the "manipulators'" standard playbook, aren't declines only supposed to happen "clandestinely" when everyone here in the United States was asleep? But, again, this last decline has been occurring while the sun was up on the East Coast. In fact, almost all of the decline occurred during market hours. Again, did the "manipulators" get the play wrong? Nah . . . couldn't be.

I sincerely hope that everyone who reads my articles has learned to ignore those who scream "manipulation" from the mountain tops. I sincerely hope that everyone finally recognizes that it is simply an excuse for being on the wrong side of the market. Spending any time on such theories does not increase your ability to successfully trade or invest in this market by even one iota. Rather, it is a waste of time and simply an excuse that people use to make themselves feel better when the market declines when they expect it to rise.

And, I sincerely hope that everyone understands that, even if there is some manipulation in the market, it still works within the overall sentiment framework that can be analyzed through the rigorous use of Elliott Wave analysis. In fact, this has been the only type of analysis that I have seen over the last year and a half that has consistently identified the direction and targets within the metals market.

So, come on over to the "dark side," and join me and my "bankster -friends" in making some money.

"If you only knew the POWER of the dark side."

Darth Vader

I look forward to meeting many of you at the New York Traders Expo on Tues Feb 19, 2013 at 1:00-1:30 pm ET at the Marriott Marquis Hotel, where I will be speaking about Elliott Wave and Fibonacci Pinball. I will be meeting with attendees right after the presentation in a Q&A gathering at the hotel.

Disclosure: I am long SLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I also own intermediate term put options