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Over the last week, we have heard many analysts reasoning that the situation in Cyprus was going to cause silver to rocket to the moon. We also heard mulling about unemployment and real estate issues which are also going to cause silver to rocket to the moon. And, then, the broken record that the Fed announcement this past week will be the catalyst for the big metals run.

But, as usual, as the latest and greatest "news events" and "reasons" are paraded through the print and television media, in the end, none of it truly matters in determining the larger trend in silver. But, author after author still feel compelled to fill up page after page with such expectations supported by this specious evidence, while never recognizing that what they cling to so staunchly is never relevant towards identifying how silver will move.

So, while many of you are now thinking "wait a second, silver did rally, so what you are talking about Avi?" Well, last weekend, I said that this was the last week I was going to allow silver to prove its bullish potential. Unfortunately, it has failed to do so, which, I am sure leaves you scratching your head after you saw the rally on Thursday. But, I must warn you, not all rallies are of equal quality, and this rally has been on very weak technicals, which suggest corrective action.

As I have stated ad nauseam, I view sentiment as the primary mover of silver. And, there are many ways with which to gauge sentiment. One of the ways is through anecdotal evidence, such as through the media. Well, when I search for very bullish articles on silver, I am actually starting to come up a bit short on those numbers. This anecdotally tells me that silver is approaching a significant bottom, as even the staunch bulls seem to be weakening. But, that does not mean that the absolute bottom has been seen, but just that we are nearing a significant bottom as the bulls begin to lose their hope.

As further anecdotal evidence, recently, Dennis Gartman, has become bullish on gold, yet again. And, as we have noted in the past, there has been no analyst that has a more perfect track record of being whipsawed by gold than Dennis. In fact, when he claimed several weeks ago that he was bearish gold, I noted that gold was nearing a bottom, after which we saw the recent rally in the gold price. Now that Mr. Gartman has become bullish yet again, it seems we are approaching a top of some sort, assuming Mr. Gartman's near perfect record is to remain intact.

Well, we can turn to other sentiment indicators to see if they are in agreement. Our Elliott Wave analysis seems to be in alignment with the Bizzaro world of Mr. Gartman. In fact, I stated over the last few weeks that until silver can strongly move through the 29.26-29.97 region, it is only setting up for another fall. There is also a higher region of confluence in the 30.40 region which may also be targeted at this time, which is where we see an c=1.382*a relationship in a larger 4th wave pattern meeting with the larger downtrend line. But, it is still highly likely that a larger decline will ensue from that region even if silver does move that high.

Again, we are still left with the possibility that silver will make on more attempt at reaching the upper region of this resistance zone. In fact, whereas the latest COT report shows an increase in bearishness by the commercial traders in the gold market, the silver market has not shown a similar relative increase. I think the commercial traders may actually be looking for a run towards the 30 region before they join their gold brethren. So, I still think that the more likely scenario which is developing is that silver will be making a new low before beginning any parabolic rally, even though it may make one more run at the 30 region before the next decline begins.

But, even if silver does not move through the cited resistance region, I also wanted to remind you of what I said last week and strongly urge that ordinary investors should not be shorting silver very aggressively at this time, as any decline can ignite a "snap back move so violent that it can take you from a profitable short position to a loss in the blink of an eye . . . For now, the time for easy money on the short side has passed for most investors, and the shorting game has become very dangerous at this time." So, only the most experienced and nimble of traders should be looking at the short side in silver, assuming a break down is seen in the upcoming week.

So, until silver is able to move through my cited resistance region in the very near term, I think we could see a set up that takes silver down to our next lower targets of 27.45 and 26.87. And, as I have said continually over the last year and a half, a drop towards the 22/24 region is still not out of the question. So, remember, as I said last week, a break down below 28.31 opens this door wide open.

Alternatively, a move through 30.90 will have me focused on the important resistance zone in the 35 region. But, this is not my expectation at this time.

As an aside, I want to make sure everyone realizes that my levels in silver relate to silver mini-futures.

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 have an initial protective intermediate term put position on SLV, to which I will add on any further rallies in silver.

Source: Silver: Looks Like Lower Levels Will Be Seen