High rollers are going to love USLV in the next few months.

USLV is the Ultra Silver ETF.  It is a completely artificial "stock" that simply tracks the daily movement of silver at what is supposed to be 3x the daily moves, up or down, of the S&P GSCI Silver index ER.  "Seeks" is the keywords and of course fees and expenses come off the top for this gambling mechanism.  But for someone with a few hundred or a few thousand extra units of fiat currency who feels like playing the ponies, I like what I see in USLV and in fact it is the only thing I have any investment in at this time except physical gold and silver coins.

Here is the chart that I see and it is a pretty one for chart watchers because it is very clean and right out of the text book. This is an ending diagonal.  I am seeing them all over the place these days (they were much less common back in the crash of 2008).  In this chart I see 5 clear rail bumps that are labeled a-e.  I also see a throw under on the e wave and look how bright red it got down there (lots of selling pressure) even as it stopped falling.  This is really basic panic selling at the bottom.  My guess is there are a lot of shorts here in the USLV fund that are going to get whacked but hard and fairly soon.

The throw under soon ran out of steam and the chart pulled its way back up into the diagonal channel.  That was confirmation #1 that the trend has changed.  It could not break back out the top again because that would have been a first wave breakout of the long term trend and that is unlikely.  It generally takes a 3rd wave to do that.  Then the chart fell back into a higher low, a so called inclining double bottom.  This is potentially quite bullish by itself and doubly so when you see that this pullback was stopped at the lower support line of the diagonal.  Since then, the chart has broken through the upper line (2nd confirmation of breakout) and recently started gapping up.  I personally bought in @$62 when I saw the breakout occur.

If I'm right about this breakout then silver is about to catch a really good bid and USLV is about to skyrocket in percentage terms.   100% should be easy to capture without even trying IMO.  And 200 or 300% are easily possible if not probable.  In fact the gains could be a heck of a lot higher depending on how quickly they occur.

I'm not recommending that anyone buy this.  I'm recommending that they watch me make some nice coin on it and I hope they find that financially entertaining.  By the way, in looking back at my series of bottom watch calls on silver,  I pretty much nailed the bottoming of the 3rd wave in this post.  I was then expecting a rebound into a 4th wave and then another final 5th wave down as shown in the main chart from that post. Things didn't play out exactly like I had modeled at the very end but they were reasonably close.

I wasn't banking on a failed 5th (even though I knew it was possible) but that's what we did seem to end up with.  So it turned out that the 3rd wave was actually the real low for the SLV ETF.  That occurred June 27th.  Then the 4th wave was Aug 27th.  And I currently model the bottom of the failed 5th wave to have occurred on Oct 1st.  This is seen a bit more clearly in the USLV chart due to the 3x factor.  Time will tell if this model is right but with Alcoa breaking out like it did today I think metals are going to get some nice sector rotation into the next debt ceiling battle/show/theater in Feb 2014.  The markets should be forward looking into this event.  Having gotten screwed by Bernanke on the lack of taper this time, I expect the markets to have much less confidence in a February taper.