Silver - another look.

In this post I suggested that the recent pullback was a 4th wave which, having hit the lower rail, had a 70% chance of being done.  That is a good deal lower than my normal 85 or even 90% probability calls and that lowered confidence really focused on this point that I made in that post: "For the record, this pullback does not really look like a simple a-b-c to me.".  While I still concluded that it was a normal pullback, I did note that it was not usual, and thus something to be watched.

I also wrote "A break down of the current support point would not necessarily be bad news for silver unless it happens with gusto and with volume.  If that happens, another look at the chart will be warranted to see what new direction the herd might be taking."

And so we got a breakdown today but not on big volumes (see blue circle at the bottom of the chart). Since the volume was low, there is still a good chance that the small blue numbered model is now in play.  In other words, what I thought was a 3rd wave was actually a 5th wave, thus wave 1 up is complete and we are working on wave 2 right now.  If that turns out to be the correct modeling, the big gap down today would indicate that we are in 3 of C.  If this is the case there is still a good chance that the 50% fib or the 61.8 fib will provide support to finish out wave 2 down.  If that turns out to be the case, the next step would be a big move that takes out the down sloping red resistance line.

Unfortunately, the strangeness of this recent move opens up other possibilities for the larger model which are bearish and which thus warrant short term caution while providing potentially an even lower entry point than the bottom call I recently made (shown at purple C below).  In other words, we could be on the verge of a massive breakout or a massive break down right now.  I need more data to form any further opinion.

If I were looking for another buy point (which I am) I would just wait right now. If the chart can break out of the upper resistance line then the odds suggest that a 3rd wave up will be then in progress.  But if we cannot hold the 50% fib or the 61.8% fib then I would wait because the odds would increase sharply that the chart is really still in a downward pattern (downward expanding triangle or "wizard's sleeve").  If that turns out to be the case then we could see much lower prices for a very short time.  As in $11-$12 would not be impossible at that point (see the upper case magenta letters A-B-C-D-E?).

All of this crazy volatility is why I think dollar cost averaging is a good idea.  Sometimes you will buy at too high a price, sometimes you will buy at below real market value.  But if there is one thing I know for sure, the dollar and dollar denominated paper assets are not a good long term safe haven.  The con men are playing a game with our economy and with our money supply.  No con ever ran forever.  This one will collapse of its own corrupt weight someday.  People who have gold, silver, a store of food and water and plenty of guns and bullets will do OK.  Everyone else will get screwed.