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SLV Looks Ready for a Run to $32
July 31, 2012 07:55 AM
SILVER IS READY TO BREAK OUT
Editor's Note: The following is a free edition of
Jeff Cooper's Daily Market Report
. For a two-week FREE trial of his daily commentary and nightly day and swing trading picks,
iShares Silver Trust
) closed over its 50-day moving average for the first time since March.
Bullishly, the breakout came on a continuation following Friday’s turn up of the important 3-Day Chart.
Both of the above technicals imply the move is for real, and it looks like SLV projects to $32-ish.
From the recent base at $26, a 90-degree run-up equates to $32.
A declining trendline from the bull market highs ties to around $32.
A Live Angle from the prior swing low and a prior swing high (green angle) coincides with the declining trendline dominating the chart at $32 as well.
From the bull-market high in late April 2011, this year's June low for SLV came 14 months later.
14 months is an important time period for Gann as it often defines significant turning points.
All of the above is underscored by the structure of 3 drives down to the $26 level from last year's high.
The important thing to understand is that oftentimes there is a FOURTH drive. This looks like what played out in SLV.
Recently, I showed the weekly
) chart from 2000 which showed 4 drives up to a test failure of the highs in late August 2000. Currently, the pattern this summer on the S&P dailies shows a 4th swing toward a test of this year’s highs. It may have somewhat more to go.
Note that the 4th drive to a low in SLV is itself comprised of 3 drives to a low.
Interestingly, the breakout yesterday, July 30, ties to the base at $26 since July 30 vectors 36 on the Square of 9 Chart.
If the behavior is constructive following a turn up of the Monthly Swing Chart on trade over the June highs, it will be further evidence of a rally to $32.
Authoritative trade over $32 implies a new bull-leg up is underway.
The action in the
SPDR Gold ETF
) and gold mining shares underscores the idea of a breakout in SLV.
Last week, we were frustrated when we were stopped out of a long swing position in
) by pennies prior to the stock exploding higher.
In the same alert in which we initiated the position in RGLD, we mentioned the solid action in gold miner
Agnico Eagle Mines
Regrettably, we only went with RGLD.
That said, the action in AEM backstops the bull case for SLV.
Note the substantial gap up in AEM last week above a Bowtie of its 50/200 day moving averages.
The gap also turned the 3-Day Chart up and bullishly, AEM continued higher.
It’s also worth noting that last Thursday’s upside thrust exploded over a Live Angle in AEM.
This angle, now at $42 should act as support on any pullback if AEM is in a runaway move, which it appears to be.
No positions in stocks mentioned.
SQUARE OF 9
JEFF COOPER MINYANVILLE
JEFF COOPER TRADER
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