Cure For Boredom
Not only is a "Storm Of The Century" ready to form and hit the U.S. east coast early next week, the "Storm Of The Century" is suddenly building again in Greece. Yikes!
Here are your salient links. First, the meteorological phenomenon. Hurricane Sandy is set to merge/combine with energy typical of a "Nor-easter" this weekend. The storm is then set to turn left and head toward the Jersey coast sometime on Monday or early Tuesday. See this:
http://www.bloomberg.com/news/2012-10-25/u-s-east-from-washington-to-nyc-at-risk-from-hurricane-sandy.html, this: http://www.weather.com/news/weather-hurricanes/tropics-scenarios-us-threat-20121022 and this: http://www.nhc.noaa.gov/storm_graphics/AT18/refresh/AL1812W5_NL+gif/204249W5_NL_sm.gif and this: http://www2.ucar.edu/atmosnews/opinion/8192/more-perfect-storm
Now, lest you think I've suddenly changed my name to "Turd Cantore", there's also a monetary phenomenon to worry about in Greece. This was supposed to have been papered over for a while...certainly until after the U.S. elections. Oops. See this:
http://online.wsj.com/article/SB10001424052970203937004578079070389572866.html, this: http://economictimes.indiatimes.com/news/international-business/greece-debt-extension-could-cost-up-to-30-bn-euros-source/articleshow/16966773.cms and this: http://www.zerohedge.com/news/2012-10-26/greek-deadline-sunday-evening
All of this means that we are likely entering into a period of significant volatility in the metals markets. The good news, for us, is that the metals are entering this phase after having already been pushed back to support levels that indicate an end to this current "correction". Of course, anything can happen and I may end up looking like a complete idiot (again), but all indications are that we have reached a bottom and have completed this mirror-image pullback to the QE2-rally pause of January 2011.
Let's start with silver where the technical picture is slightly more clear than gold. Look, first, at this 2-hour chart. You can plainly see the obvious support at $31.60 - $31.70. Four attempts have now been made this week to breach this level and each wave has been repulsed. Now, once silver trades back above $32.25 and then $32.50, the pressure on the recent shorts will begin to increase. Some will begin to cover, the rally will strengthen and, soon, the bottom will be clear to nearly everyone.
And you can clearly see the bottom forming on these next two charts. The 6-hour chart reveals the downtrend line from the highs on 10/4 and the daily chart shows that we have completed an almost perfect and "textbook" example of a 50% retracement.
The gold charts look pretty good, too, though not quite as clear as gold seems to be trading about 24-48 hours behind silver. This is a little odd in that gold usually leads the trade. Whatever. The gold chart also shows that a bottom is forming/has formed and a move higher next week will confirm the lows.
So, relax. Keep the faith, be happy and buy a little more physical today. If you live on the U.S. east coast, head out to Lowe's and Costco and prepare to hunker down. If you live in Greece, buy yourself a stock of gyros and ouzo and consider taking the next week off.
I'll be updating things throughout the day, including thoughts on the CoT when it's released, so please check back later and review all of the comments. Have a great day!