May Silver’s Precise Bounce Is Encouraging

Is the worst over for silver? From a technical standpoint, both the Comex futures and Silver Wheaton shares have done exactly what we might have expected of them if they were carving out a durable bottom. On Monday, the mining stock came with a single penny of a 27.97 correction target where we’d told subscribers to get long using an 8-cent stop-loss. Then, yesterday morning, May Silver futures trampolined from a low that lay just 1.5 cents from a correction target also identified using Hidden Pivot analysis. In both instances, powerful rallies began from within a hair of the targets, raising the odds that an important low is in. Our 29.940 price objective for the May Comex contract was flagged three weeks ago when the futures were trading above $31 an ounce. Yesterday’s explosive bounce from 29.925 carried them all the way to 30.740 — an 81-cent surge that would have been worth $4000 to any trader lucky enough to have caught the entire ride.

As for Silver Wheaton, subscribers have been instructed to hold onto half of any shares they may have bought when the stock bottomed Monday at 27.96. Yesterday, tracking the ballistic move in bullion futures, Silver Wheaton traded for as much as 29.79. That represents a gain on paper of more than 8% in less than a week, since subscribers were told to take a partial profit near 28.61. With our cost basis effectively reduced to 27.47, we can afford to let our profits run. But will the move continue? It’s impossible to be sure. However, based on the energetic leap that these two silver vehicles have taken so far, we are encouraged to hold onto at least a small portion of our original position in Silver Wheaton for a potential four-bagger. We should note in the meantime that the stock is not yet out of the woods, technically speaking. By our Hidden Pivot runes, SLW will need to rally a further $2.44, topping a peak at $32.20 recorded on April 12, to turn the daily chart decisively bullish for the intermediate term. At that point, we’d say there’s at least a 40% chance that the correction begun almost exactly a year ago is over.

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