Pan American Silver (PAAS): Knocking on Heaven's door (but wait for the dip to buy!)

Here is my first post ever on Pan American Silver (PAAS).  It's not that I didn't know about the shares that I didn't write sooner.  It's that I didn't like the chart until just recently.  In that post I correctly identified a major bottom.  I continued to watch the shares and then recommended it as a buy in this post.  I knew the shares were going up so I posted the price right in the post title: $11.62.

Since then the shares have skyrocketed.  Here's the monthly chart.  It really doesn't look like "skyrocketing" if you just eyeball it, but folks that is a 50% move from the exact bottom and 33% from where I unequivocally called it a buy last month.  That's quite a move IMO.

I believe that PAAS is in a new bull market.  I believe that, because it is a profitable, dividend paying company, that it is being appreciated more than other metals plays.  That is almost panic buying you are looking at right there.  Also, this move, if it can hold and not make a lower low, would form a powerful multi year inclining double bottom.

Of course nothing goes straight up or straight down.  At least not for very long.  These shares are volatile and so when you get such massive profits so quickly you have to be expecting a pull back.  That light green ascending line near the bottom of the chart is the same lower green line in the monthly chart above.  It should serve as major resistance.  I do not expect the shares to break through on this first wave up!!  I expect them to kiss the line and then fall back and then come running at it in a screaming, gapping up, full on rebel yell that smashes the shorts and sends them screaming to cover their bets.

By comparing a higher quality outfit to the more speculative ones I think we can also make another statement about the state of the silver bull market in general.  I expect that the low or no dividend miners could be headed for a lower low right now.   I think they could be playing out an ending diagonal.  While PAAS is ready for a significant pull back, it does NOT look like an ending diagonal.  That means the next PAAS pullback would be a wave 2 while all the other silver plays I have mentioned in this blog are really just finishing their 5th waves.  In other words, because it is higher quality, PAAS is likely a good leading indicator of the new metals bull.

So if PAAS pulls back only per the blue model (less likely but hyper bullish) while the other miners auger into their 5th wave throw under ending diagonals, then you can be quite confident that the metals and miners bear market is over.  This is called bullish non-confirmation and it is a major, major signal.  Alternatively, PASS could pull back to the 61.8 fib on the low side @$12.  IF you are so lucky to see that and IF the wave pattern is an a-b-c pullback, buy-buy-BUY with both hands because the next thing will likely happen is a 3rd wave explosion upward.  

If this pulls back and breaks out as modeled above then the next major resistance would be the level of the prior 4th which is the heavy green line at the top of the chart.  If you buy at $12, that's a double before mid year folks.  It does not get any sweeter than that.