TRX has built a beautiful inverse H&S bottom and is now in the process of breaking out through the neckline. The MACD has turned positive with the blue Histogram now above the zero line. I’m going to buy it at 2.70 for the Extra Trade Ideas link just below the Model Portfolio stocks.

The weekly chart shows the inverse H&S bottom, that I just showed you on the daily chart above, that is forming right on the 2008 crash low as have so many other precious metals stocks. This is exactly the place you want to look for some type of reversal pattern. Notice the huge positive divergence with the RSI at the top of the chart. Also the MACD has a positive cross and the blue Histogram is above the zero line. Everything looks lined up and ready to go.

The long term monthly chart shows a huge trading range that goes back many years. Buy the bottom and sell the top until something changes. The monthly indicators are still slightly negative but are getting very close to turning positive. The monthly indicators let you know if your in an uptrend or downtrend which is key to understand. For the most part you want to trade in line with the big trend and scalp the counter trend.

I’m getting the feeling that some of you are in over your heads when it comes to the markets. Playing the stock markets is nothing more than psychological warfare. It’s all about emotions. When you put money and then leverage on the playing field many investors loose sight of the bigger picture. As soon as the markets don’t go their way they start thinking with emotions instead of what discipline they use to trade.

The HUI is just starting its fourth week in this congestion zone between 236 and 250 with many reversals taking place in that tight trading range. We don’t know 100% for sure if this is a consolidation pattern or some type of topping pattern that has been building out. Our discipline, Chartology, strongly suggests this is a consolidation pattern forming but there are no guarantees this is the case until we get confirmation one way or the other.

If this congestion area is wearing you out then you are way too leveraged and need to cut back on your position size. So far this has been just a mild 14 point trading range on the HUI that one should be able to cope with without getting all emotional wondering when the pain is going to end. Folks, this trading range is so small it doesn’t even show up on a weekly chart yet. How you’re coping with this little trading range should tell you of your own psychological makeup.

If you are having a hard time dealing with this trading range you really need to think about cutting the size of your positions so that you can think with a clear mind. If the HUI trades down to its 50 dma will you be able to hold on? If the answer is no then you really need to reduce your position size as soon as possible. Every trade doesn’t have to be a home run like so many think.

We have three different portfolios ranging from the Model Portfolio which is conservative. The Junior Portfolio which is a little more speculative and then the Kamikaze Portfolio which is the highest degree of speculation. The Kamikaze Portfolio equals high risk for high reward. Make sure you understand what that means. HIGH RISK – HIGH REWARD. Most investors don’t have the emotional capability to play in the Kamikaze Portfolio. Believe me there is nothing wrong with that. The Juniors are offering us a good lower risk and high reward opportunity if one can hang on through the draw downs. Then there is the Model Portfolio that will do very well if we are indeed entering the second leg of this secular bull market.

So, be honest with yourself and decide which is the best way for you, personally, to invest your hard earned money. Keep in mind this isn’t a child’s game we are play here. We are going up against the brightest minds in the world that want your money. They could care less if you loose every last penny to them. For them it’s like taking candy from a baby. The inexperienced get eaten alive before they even know what hit them. So please keep your leverage to a minimum and trade according to you own psychological makeup so you can stay in the game long enough to learn something. All the best…Rambis

In this Weekend Report I want to take a good hard look at silver which has been the laggard in the precious metals complex to see if there is something technically wrong. If you been following the precious metals complex for any length of time you’ll know that silver can be contrarian at times. It likes to start out slow and then once gold begins to pickup the pace then silver will play catchup. Once silver gets ready to move it can rally hard and fast catching up to gold and surpassing in on a percentage basis. So far since the December low silver is playing its game of Opossum by looking weak and not confirming the move in gold or the precious metals stocks. I think this is a deceptive look on silver right now. Lets see what the charts are telling us about silver and look for some clues that might help shed some light on what is really taking place right now.

The first chart is a six month daily look that shows our five point rectangle reversal pattern that has reversed the downtrend. The breakout was accompanied buy some really heavy volume which is what you like to see. I’ve added a brown shaded support and resistance zone that gives us a place to look for support now that silver has broken above that area of resistance. That zone is roughly 20.35 to 20.60 which should offer good support. One last important note on the chart below. Since silver made its breakout high it has been in backtest mode which is to be expected. In doing so it has created a small red rectangle halfway pattern to the downside. Using the impulse measuring technique I’ve been showing you the little red rectangle halfway pattern has a price objective down to the 25.53 area which is in the brown shaded support and resistance zone.

Lets now look back about one year that shows the two reversal patterns that are now in play. The first reversal pattern is the big blue five point Diamond reversal pattern. This Diamond has shown up on a lot of the PM stocks which has done a little morphing since we first started to recognize it last year. The other reversal pattern is the blue five point rectangle reversal pattern that we looked at on the chart above. We have two – five point reversal patterns in play right now that suggests a decent bottom should be in place right now.

Lets look at another daily chart for silver that is about a year long that shows us another positive development. When silver broke above the brown shaded support and resistance zone it also took out the top rail of a six month downtrend channel along with the top rail of the 5 point blue rectangle. If you look real close you will see that silver backtested the top rail of the downtrend channel, around the 20.50 area, for just two days before it shot higher. It now looks like silver is going to backtest the brown shaded support and resistance zone, from the topside, just as it did back in October of last year. Note how fast silver moved up last August when it was ready to go. If you’re not positioned before a move like that it’s hard to get on because there is no pullback. You either plug your nose and jump in or you miss the move.

Lets look at one more longer term daily chart for silver that puts the downtrend channel and the blue five point rectangle reversal pattern in perspective. I would like to focus your attention to the bottom right hand side of the chart that shows our current price action. There are three possible areas of support that intersect right at the 20.50 area. The first one is the top of the blue rectangle. The second is the bottom rail of the red bull flag that is made up of the little red rectangle halfway pattern that I showed you on the first chart above. The third possible area of support is the 50 dma that comes in at 20.36.

Now lets take a look at a weekly chart that starts putting the big picture into focus. This weekly chart shows the rally up to the 50 area and the bear market that has ensued. After breaking down from the unbalanced double top silver went right into a six point rectangle consolidation pattern that lasted almost two years. Whenever you have a horizontal trading range or rectangle I always look for a mid rail that forms in the center of the rectangle. Sometimes these mid rails will be exactly in the middle and sometimes they can be offset just a bit either up or down from the mid point. As you can see on the upper six point rectangle the center blue dashed  rail is pretty close to the center as shown by the light colored blue arrows. What the blue arrows are showing is the tops and bottoms which you connect your center line to. Above is support and below is resistance. As you can see in our current horizontal trading range the mid line is a tad lower as shown by the thin blue arrows. It comes in at, you guessed it, 20.50. The black dashed down sloping trendlines shows what happens when they get broken to the upside. As you can see there is generally a very strong rally backup to the top of the trading range. So far silver is four weeks into its breakout move above its black dashed downtrend rail. Hopefully when the backtest gets finished it will waste little time rallying back up to the top of the trading range between 25 and 26.

Lets look at the monthly chart that shows the very large uptrend channel that silver has built out over the last 12 years or so. The two big blue patterns make up the width of the uptrend channel with the smaller red secondary patterns making up the rest of the bull market in the move going into the April 2011 top. Whenever I see a chart like this, that has several smaller consolidation patterns that form in an uptrend, and then the stock makes a much bigger consolidation pattern, I always think of the bigger consolidation pattern as a halfway pattern. This can be on any time frame. This is one of those “WHAT IF” moments. What if this three year blue bull flag is a halfway pattern to the upside. What would the price objective for silver be if this is the case? If this three year bull flag is actually a halfway pattern in the secular bull market, that the precious metal complex has been in since the beginning 2000, then the price objective would be around the 200 area give or take 20 dollars. That’s a long time from now but it’s a possibility. Right now we have to worry about the 20.50 area holding support and take it one step at a time.

The last chart I would like to show you for silver is the quarterly chart that shows all the history going back to 1970. You can see why the possibility for 200 isn’t out of the question. Silver has been reversing symmetry back up to how it went down after the 1980 all time high. Its been making a series of H&S bottoms with the third and largest H&S bottom working as support as silver is in backtest mode right now. Also silver could be forming a very large cup and handle with our blue bull flag being the handle. The first thing we need to see happen is for silver to breakout of its bull flag then takeout the all time high at 50. So there is a lot of work to do but the possibility is there in the long term picture. Note how big our current blue flag looks compared to any other consolidation pattern on this very long term chart.

In the very short term silver needs to hold support around the 20.50 area and then rally strongly up from there. If it can do that then our first price objective will be the 25 to 26 area which is the top of our recent high in this consolidation pattern and the bottom of the six point rectangle that formed after silver put in its major top in April of 2011. So we wait for silver to shows us her hand. All the best…Rambus

As I promised you last night lets look at the GLDX, Junior Gold Stock Explorers etf that maybe one of the hottest areas in the markets right now. Tonight I’ll show you the two different measuring techniques I use to get an idea of where the price may move once a breakout is in progress.

The first method I call the breakout to breakout method which the name implies. You can use this method when you have a top, bottom or consolidation pattern below your current consolidation pattern. Using the GLDX we see this is the case. We have the red bullish falling wedge that formed below our current blue triangle. If this plays out according to plan the blue triangle will be in the middle between the red bullish falling wedge and the price objective up to the 19.50 area.

To measure the blue triangle as a halfway pattern I just take my fib tool and measure the distance from the breakout from the red bullish falling wedge to the first reversal point in the blue triangle, blue arrow. You do this with any consolidation pattern, whether it’s a rectangle, wedge, Diamond or whatever the consolidation pattern is. You then take that measurement and add it to the breakout of the blue triangle halfway pattern to get your price objective up to the 19.50 area.  Sometimes these measurements can be dead on the money and other times fairly close. It gives you a place to look for other signs of where the impulse move may run into resistance. In this case you can see a top that was formed last August in the 19.50 area so that is another good clue that the breakout move should go up into that area.

Note the MACD just crossed with the Histogram moving above the zero line along with the slow stoch also crossing. This breakout is being accompanied by some nice big black volume bars also. As you can see today’s price action is testing the high of the blue triangle which is encouraging. So there are a lot of positive things going on with this little junior stock index.

The other method I use to measure a price objective I call the impulse method as it’s measuring the equal distance above and below a halfway pattern. Using the same GLDX chart we are going to measure the blue triangle as a halfway pattern using the impulse method. Again, take your fib tool and measure from the last reversal point in the previous consolidation pattern, red falling wedge, which actually starts the impulse leg up. You then take that measurement and add it to the last reversal point in the blue triangle to get your price objective up to the 18.85 area as shown by the blue arrows. It doesn’t make any difference how many reversal points a consolidation pattern has, 4,6,8 or more, you always use the last reversal point in any consolidation pattern to measure for your price objective.

So between the two different measuring techniques we get a range between 18.85 and 19.50 with the previous high made last August also in that area gives us a place to shoot for. I know there are other measuring techniques that people use but for me this is how I like to calculate a measured move.

It’s been awhile since we looked at the US dollar that has been showing some weakness lately. The first chart is pretty cut and dried as it shows a big blue bearish rising wedge that had a clean breakout and backtest. It then went on to form the red triangle just below the bottom blue rail which as you know I view as a bearish setup. The price objective for a rising or falling wedge, many times is the beginning of the wedge. In this case the blue bearish rising wedge started to form back in the late summer of 2011 at the 73 area. You never know 100% for sure how the inter market analysis is going to play out but a decline, in the US dollar to the 73 area, could be a big catalyst for a large move up in the precious metals complex. We’ll know in hindsight.

Some of our longer term subscribers may remember this big 11 point Diamond reversal pattern that formed last year. This is a very similar setup to the big Diamond that gave me a clue that the HUI was in a very large topping pattern well before the price action broke down. I view the blue Diamond as the head portion of a big H&S top formation. I’ve added a neckline symmetry rail that is just a parallel line taken off of the neckline that often times gives us a place to look for a high on the right shoulder. As you can see it nailed the height for the right shoulder. The price objective is quite interesting for this H&S top. If the neckline gets broken to the downside the price objective would be down to the 73.50. This puts the price down into the 73 area as shown by the bearish rising wedge on the chart above. Again, we’ll know in hindsight if this all plays out but for the moment this is what the Chartology is telling us.

There is another area we haven’t looked at in awhile and that is the Uranium Sector. This area has also caught on fire. Lets look at the NLR, the Uranium etf, that shows the price action breaking out though the top rail of  a bullish rising wedge. This is a pretty impressive move taking place right now in this sector.

Below is a weekly chart for the NLR that shows all the chart patterns that have developed over the last 6 years. Note the big blue bullish falling wedge that broke out well over a year ago but it was a slow grind higher until just recently as prices have started to accelerate to the upside. Sometimes I’m still amazed at what the Chartology can show you sometimes before an event happens. Notice the red bearish rising wedge that had formed back in late 2010 around the 65 area. That vertical breakdown form that red bearish rising wedge was the Japan earthquake. That was the top like so many other commodities that have been in a 3 year correction that started in 2011. Three years is a nice long time for a correction to take place in a secular bull market. Maybe we’ll see inflation first and then deflation. It really doesn’t make and difference as we will be  following the price action to where ever it takes us. All the best…Rambus

Below is a chart of the HUI H&S top that I was showing on another website , during its formation in 2008 and the crash that followed. Keep in mind the HUI had been rallying for 8 years without a topping formation so when I started to show the possibility of this H&S top nobody wanted to hear it. Some of you know the feeling, that when you post something negative about the precious metals complex, you have to take a lot of flack to make your point.

The point I want to make with this chart is the volatility that occurred when the neckline was broken to the downside. The volatility we are experiencing right now on the HUI is so very mild compared to the 2008 crash. There were two halfway patterns. The first one was the red bear flag that had a price objective down to 252 red arrow. That low was the first reversal point in the much bigger blue bearish falling wedge that was also a halfway pattern. I used the breakout to breakout method to measure the price objective down toward the 145 area. Just measure the distance from the breakout from the H&S top to the first reversal point in the blue bearish falling wedge, red arrow. Take that measurement and add it to where the price action broke out from the blue bearish falling wedge to get your price objective.

Note the price swings inside the blue bearish falling wedge. These are daily bars that show the first rally inside the blue falling wedge was right at 100 points in just 2 weeks. The decline down to reversal point #3 was 130 points in about 2 weeks before the HUI rallied 70 points to 300 that created the 4th reversal point. Note the clean breakout and the backtest 3 days later that sealed the fate for the blue bearish falling wedge. I didn’t have room to label the bottom but I call this type of bottom a 2 1/2 point double  bottom. You can see the double bottom that formed between Oct and December and the rally that took the price action up to the apex of the blue bearish falling wedge. You can see how volatile the price action was when the HUI put in the second low in December that was a tad higher than the October low that was a small double bottom in its own right.  Normally the double bottom hump should hold support but sometimes, in volatile markets, the stock will make one last attempt to decline but the bears are finally exhausted and there are just buyers left so the price only declines about halfway down before it’s exhausted.

This monthly chart shows the total history for the HUI. It’s actually one of the most symmetrical and beautiful charts, from a Chartology perspective, that you will ever see unless you look at the gold’s bull market that has many beautiful chart patterns. When I see the beauty of this chart I can’t help but to think this chart was made by a natural process. If the precious metals were manipulated, as some many gold bugs presume, you could not have such beautiful looking chart patterns. They would be all ragged and no symmetry if some one had tried to manipulate all the stocks that make up the HUI. This long term monthly chart is a textbook look at Chartology and how it works in creating chart patterns and impulse moves. Maybe sir muslhead will confirm for me if there is actually a hidden bullish divergence taking place between the 2008 and 2013 low. Bottom line : Is this the start of the 8th impulse move higher since the HUI was first conceived? We’ll know in hindsight. All the best…Rambus

In this Weekend Report would like to show you some very long term charts for some of the precious metals stocks that shows us where we’re at in the big picture. For me it’s important to know where a stock has been so I can have and idea if it’s close to a previous low or high or is it just trading in the middle of no mans land. It just provides perspective that one can use as they can then start to reduce the time lines down to the daily and even hourly charts to help make a decision on where to buy or sell a stock.

When you view these precious metals stocks you will see a lot of potential looking double bottoms that have formed from the June and December lows of last year. Keep in mind in order for these possible double bottoms to complete the price action has to trade above their double bottom humps to complete their bottom reversal patterns. Also look at the RSI at the top of the charts for a positive divergence in many cases. At the bottom of the charts you will see the MACD and the Histogram along with the slow stochastic. Again, on many of the precious metals stocks you will see the MACD getting ready to crossover which will give a buy signal with the blue Histogram, which is approaching the zero line, also helping confirm the buy signal.

So far the move off of the possible double bottoms doesn’t look very impressive yet as these are some very long term charts but you can see the potential is there if these precious metals stocks can continue to rally. With that said lets look at some precious metals stocks and see how the present time frame fits into the longer term look.

Lets start with a chart for ABX that shows the complete history of this stock. You can see the big H&S top that was put in over the last several years and the decline that took place last year. It’s trying to put in a bottom that is actually a little bit lower than the 2008 crash low. If this current bottom can hold then the first real area for resistance will be the big neckline. Note how close the Histogram is to the zero line and the MACD has just given a buy signal with the black line just now crossing over the red line. Keep in mind this is a very long term chart and these kind of buy signals don’t come around very often.

GG was probably been one of the stronger big cap precious metals stocks during the 2013 decline as the current price action is trading well above the 2008 crash low unlike so many others in this sector. The first real test of strength will be when GG tests the big neckline just above. This is only speculation at this time, as the move off of reversal point #4 is just beginning, but I’ve added a “WHAT IF” comment that GG could be forming a consolidation pattern going back to 2008 high just before the crash. As you know I always look for at least four reversal points in a consolidation pattern before it’s complete. What if this is the fourth reversal point being put in place right now that is part of a five year consolidation pattern?

NEM on the other hand is not showing us anything to get excited about. You can see the MACD is still falling along with the Histogram. The price action shows no signs of a bottoming pattern. The only thing positive about this stock is that it’s still trading above its 2008 crash low. NEM is a good producer of some very nice H&S tops which is important when the precious metals complex is topping out. We can always count on NEM to show us a top.

Lets take a look at the history of ASA that has been forming a possible double bottom on the the bottom rail of its uptrend channel. As you can see it’s at a critical juncture right here as the price action is trading right up to the possible double bottom hump. If ASA can break above that DB hump that area should offer support on a backtest. The big H&S neckline is going to be the first real area of resistance if ASA puts in a double bottom. It’s all about taking it one step at a time. There is a nice positive divergence on the RSI at the top of the chart. The MACD just had a positive cross with the Histogram just shy of the zero line.

Lets look at several Royalty stocks as they usually are the strongest in the precious metals sector. RGLD has been trading in a parallel uptrend channel for most of its bull market. As you can see it’s forming a possible double bottom on the bottom rail of the parallel uptrend channel. The 2008 crash low is hardly visible on this long term historical chart of RGLD. This could be one to watch that shows us the way higher. The MACD and Histogram still have some work to do but there is a positive divergence on the RSI indicator at the top of the chart.

FNV is another Royalty company that looks very similar to RGLD. As you can see it’s still trading below the bottom rail of its uptrend channel. What really needs to happen is for FNV to tade back inside the rising channel to negate the breakout. On a positive note it has made a higher high and a higher low which is technically an uptrend. The MACD and Histogram still have a little more work to do before they can offer a buy signal.

SLW hasn’t been around for very long but this stock can really move once it gets going. It could be forming a bullish expanding falling wedge if it can ever trade above the top blue rail. The 2011 high shows up on a lot of the precious metals stocks that suggest that if the PM complex is still in a secular bull market then many of these types of consolidation patterns will be formed at the halfway point. Time will tell. It always does.

This next chart shows the total history of AEM which is quite interesting. I clearly remember this stock being one of the first PM stocks to start its bear market. Note the brown shaded support and resistance zone in the middle of the chart that held resistance until AEM finally broke through in 2005. Notice how this S&R zone has reversed its role and has held support ever since. As you can see it was tested from the topside once in 2008 and again just recently. Here you can see a possible big blue rectangle that maybe forming with this latest bottom being the 4th reversal point. The MACD has just had a positive cross with the Histogram well above the zero line.

GSS has had several good moves during its lifespan but has always given back the gains. As you can see it has just bounced off the brown shaded support zone which has launched several good rallies in the past. It’s currently testing the possible double bottom hump that it needs to break above to confirm a double bottom is in place. The MACD has just had a positive cross and the Histogarm is above the zero line.

NGD hasn’t been around very long but it really had a good rally off of the 2008 crash low. This stock shows another example of a possible bullish expanding falling wedge that began at the 2011 high. As I stated earlier, if we’re still in a secular bull market for the precious metals complex, I would view the blue expanding falling wedge as a halfway pattern to the upside.

These last two precious metals stocks were the first ones on my radar screen that suggested a bottom maybe forthcoming in this sector. SSRI is now starting to trade above the double bottom hump which is a big deal. As this was one of the first PM stocks to bottom I expect it to show the way higher. SSRI was one of the first PM stocks to cross on the MACD. The Histogram is also trading above the zero line. On the long term charts this is what you want to see happen.

AU is the other PM stock that caught my attention early on as one of the leaders coming out of the bottom. Notice the brown shaded support zone at the bottom of the chart that has led to several very strong rallies. Also notice the clean breakout above its double bottom hump which now should offer support on any retest. The MACD has a positive cross and the Histogram is above the zero line.

I would like to show you one last chart which is for the XAU that I’ve shown you before. The XAU, which has the longest history for the precious metals stocks indexes, is also building out a possible double bottom which would be the 6th reversal point . Note, the little spike below the bottom rail of the rising wedge, at reversal point #6, which now looks like a bear trap.

There are many more precious metals stocks that are showing more positive chart patterns in the junior’s sector. The juniors have really been leading the way higher with some of them making some pretty impressive moves so far. There are a lot of positive things going on in the precious metals sector right now that is very encouraging. There is still a lot of work to be done before we can definitely say the worst is behind us but so far in 2014 things are looking much brighter than the dismal year of 2013 for most of the precious metals stock investors. A reversal has to begin somewhere and this area looks like as good a place as any in which to begin a new leg up. So until something changes some of these charts above, to the negative side, we have to give this new trend a chance to show itself and see what happens. All the best…Rambus

This stock has been on my radar screen along with about 25 more small cap PM stocks that I haven’t had room to buy for the Junior Portfolio. This stock is a good example of why a person needs a big basket of these little Juniors because you never know which ones are going to really takeoff. Everyone has their own idea on how to play these little guys but from my experience it really pays to buy a big basket of these very volatile stocks.

I have had three different, 400% to 500% portfolios gains, starting back in the spring of 2002 by buying a big basket of at least 15 junior stocks. One portfolio didn’t have one stock over a dollar. I truly believe we are embarking on another one of these 400% to 500% gains in the precious metals junior stock portfolio as they have been so decimated. Actually many topped out in 2004 and 2005 with many more topping out in 2011. If you’ve been following the PM complex for many years then you know exactly what I’m talking about. This is what we live for, another opportunity to do this all over again. I know most of our subscribers come with a precious metals complex background so this isn’t new to you but if you’ve never participated in one of these big moves in the juniors they can be something to behold.

I strongly urge you to think about this. If you make some money in the Kamikaze Portfolio take some of those profits and start putting them into some if these juniors precious metals stocks. You will still get a lot of leverage without the pressure of watching the volatility in the Kamikaze Portfolio. In the early part of this bull market these rallies generally lasted about one year from trough to peak. If December marks the low then we are already several months into this new impulse move higher. We never know 100% for sure what the future holds so all we can do take advantage of a good setup until something tells us it’s broken. Right now, by looking under the surface of the precious metals stock indexes, there are some very encouraging signs that tells me this could very well be the start of a new impulse move higher. We’ll know in hindsight.

The daily chart shows the big blue 5 point downtrend reversal pattern that was broken to the upside in January and did the backtest in the early part of February. There was no way to know what would happen next but as you can see the price action just went vertical right after the backtest was complete. At this point I would be looking for some type of consolidation pattern to form to digest the recent gains. I put on the Fib tool that may show you where the 2nd several point may come into play. It would be nice to see a decent consolidation pattern of several months form so it can charge forward again. Two steps forward and one step back.

The weekly chart shows you why this stock stopped going higher. The sharp rally hit the top rail of the expanding downtrend channel and is backing off telling us that top black rally is still very HOT. A break of the top rail will signal the bear market is over for this stock and would be a good place to buy or add more shares.

In this Weekend Report I would like to show you the Chartology of silver that you won’t see anywhere else on the planet. Some of these charts might not conform to the classic textbook scenarios most chartists believe are the only correct ways to construct a chart pattern. I have learned through many years of charting the markets that there are areas in this field that can be opened up for further interpretation and still fall within the loose confines of what is considered a chart pattern. Keeping an open mind in any of the trading disciplines of the markets from Elliot Wave, to cycles or charting can give one more insight and clarity than any one book can give you. Real time analysis and interpretation is the only way to really get to know your chosen field for investing in the markets.

With that said lets look at some silver charts. We’ll start with the short term charts and work our way out to the very long term charts that hopefully will put what silver is doing right now into perspective . When you look at the quarterly chart going back to the 1970’s, What happened those many years ago still has a direct impact on what is happening today , even though this seems impossible.

Lets start with a 10 month daily chart for silver that has a lot of information on it. If you’ve been follow the precious metals sector you know that silver had a huge day on Friday February 14. Happy St. Valentine’s day silver.

What makes Friday’s big move so special? There are several very good reasons. First, silver broke out from a red 2 1/2 month long rectangle reversal pattern to the upside. This breakout also took out the brown shaded support and resistance zone that had been in place since July and August from last year. Note how the brown shaded support and resistance zone acted as resistance back in August and then once it was broken to the upside it reversed its role and held support back in October and November. This support and resistance zone gave way to the downside when silver made its ultimate low in December, again reversing its role from support to now resistance. As you can see on the chart below silver was unable to penetrate that brown shaded support and resistance zone until Friday of this past week. For 2 1/2 months silver was trapped in the narrow rectangle while the precious metals stocks were racing higher. The top rail of the downtrend channel was also taken out this week which has now cleared the way for silver to run higher. Whenever you see a huge spike like we seen on Friday this tells us the bears have become exhausted and have no fight left. If you want to kick them while their down now is a good time to get your licks in.

This next daily chart goes back about 1 1/2 years that puts the downtrend channel and the red rectangle into perspective. Note the last bar on the bottom far right hand side of the chart that shows you what a breakout looks like. These kinds of days don’t come around very often but when you see such a day take notice as it usually means something significant has happened. The other important feature on this daily chart is the possible double bottom that maybe forming. You can clearly see the June and December lows that formed in the same general area. Silver along with gold are both showing this same setup. I believe they are going to do one of two things. First, this possible double bottom will be the reversal pattern that reverses the almost 3 year decline in silver. Second silver could be building out a large consolidation pattern that will eventually break to the downside. The August high of last year will be the key to which pattern wins out. For the time being though we have a nice rally getting underway that should take the price of silver back up close to the August high around the 25 area. At that point we’ll have to reevaluate the situation again and take it from there.

There has been a chart pattern we’ve been following, at Rambus Chartology, that was a blue 6 point Diamond consolidation pattern that has shown up on gold, silver and precious metals stock indexes. They had all the characteristics of playing out to the downside but a funny thing happened on the way to the Bottomz Inn. After they broke to the downside, as we anticipated, they slowly started to form a small chart pattern that ended up being a reversal pattern before the Diamonds could fulfill their measured move. This is how the markets talk to you. When you see a beautiful setup and it starts doing what you think it should do but then doesn’t follow through you have to take notice. The only way you can do this is to keep and open mind all the time as there are no absolutes in the stock markets. As you can see on the chart below the 6 point Diamond, the bottom dashed rail was the original bottom of the Diamond pattern. I just made two changes to the original 6 point Diamond. First I extended the top rail down to the apex keeping the same angle. The biggest change was the solid blue rail that starts at reversal point #3 and catches reversal points five and seven which creates a reversal pattern to the upside.This is a classic Example of a Morphing Pattern . What initially appeared to be a breakout to the downside of a perfect diamond turned out to be a Diamond of another cut . This is a very big deal because it now gives us a very nice reversal pattern that has formed after an almost three year decline. A Diamond Bottom . I will show you what I mean a bit later.

This next weekly chart shows you why this seven point Diamond reversal pattern is so important. This weekly chart goes all the way back to the all time high made in April of 2011. You can see silver formed another beautiful Diamond, the 8 point blue Diamond, that was a halfway pattern. Keep in mind an even number of reversal points creates a consolidation pattern and an odd number of reversal points creates a reversal pattern. Notice the big long bar on our red seven point Diamond reversal pattern. I will show you why I think this could very well be the bottom for silver on the charts to follow.

Below is basically the same chart I showed you above but this chart has a downtrend channel in place. As I mentioned above that the blue 8 point Diamond was a halfway pattern to the downside. By that I mean it formed in the middle of the three year downtrend channel. Many times these types of halfway patterns can measure out a price objective pretty close. In this case you can measure the distance between the first two blue arrows and add that distance to the last reversal point on the blue Diamond at reversal point #8 to get your price objective down to the 18 area. Once the price objective is reached the stock can do one of two things, First it can form another consolidation pattern, which the red Diamond could have been until last Friday. Or it can form a reversal pattern. With silver’s big move on Friday I have to give a really big edge to the red Diamond pattern being a reversal pattern to the upside instead of a consolidation pattern.

This next chart shows you why I think the red 7 point Diamond is a reversal pattern. On the left hand side of the chart you can see the red bullish rising flag that I measured using the breakout to breakout method as explained by the red annotations. As you can see it nailed the top of the bull market close to 50 which said that part of the bull market was over and started the three year decline. On this chart I’m using a rectangle as a halfway pattern to the downside which corresponds closely to golds 22 month rectangle. You can see the spike up through the top rail at reversal point #4 which I used to create the Diamond. In either case the price objective as measured by the blue arrows, and which I call an impulse measurement vs the breakout to breakout method, still has a price objective down to 18.64 which is still very close to the actual bottom. So we had a halfway pattern that nailed the top of the bull market at 50 and now it’s looking like we have another halfway pattern that maybe telling the bottom is in. I still have a couple of more chart to make the case that silver has indeed made an important bottom.

We started out by looking at some daily charts for silver that showed the red rectangle reversal pattern that was made at the bottom of this three year decline. We’ve looked at the blue 8 point Diamond consolidation pattern that gave us a price objective down to the 18 area. The red Diamond has 7 reversal points making it a reversal pattern to the upside that has formed at the price objective of the blue 8 point Diamond halfway consolidation pattern at eighteen or so. Now I would like to show you a couple of very long term charts for silver that I think will seal the fate for the bottom being in place.

Below is a very long term Quarterly line chart for silver (in Log Scale) that goes all the way back to 1970. Keep in mind the price objectives that I showed you on the charts above that show how the 18 area could be the bottom. This chart doesn’t need any more explanation as you can see why 18 is such an important number.

This last chart is the same chart above but this time I’m showing it as a bar chart. When we shorted the precious metals complex starting in December of 2012 there was one thing I kept repeating as we went lower. I kept saying, look for reverse symmetry. What this means is how a stock goes up, especially in fast moving market, they will reverse symmetry back down through that same area when they finally top out. That helped us out immensely during the PM crash last year. We knew where we were in the big picture which is very important to know. This long term chart for silver, that goes all the way back to 1970, shows how silver’s bull market has reversed symmetry back up vs how it went down in the early 1980’s. You can see three distinct H&S bottom patterns where each had a breakout with a backtest. Next I would like to focus your attention to neckline #3. Is this just a coincidence that the backtest is taking place at the 18 area after all the reasons I’ve shown you from all the charts above? I don’t know about you but this sure looks like a good low risk entry point if one wanted to buy some silver.

We never know until we can look back and see 100% for sure where a bottom or top took place. This whole scenario may blow up tomorrow but until it does I have to go with what the Chartology is telling me today and that is a very important bottom has formed or is forming based on all the charts I’ve shown you above. As I stated in the first paragraph that my charting techniques might not go by the book but I always try to paint a picture, using charts to explain what I think is happening. We must listen to the language of the Mr. Market to get an advantage in one of the toughest games there is to play on the planet, All the best…Rambus

I Sold half my USLV Position

Fully (class dunce)