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Indeud, there is no doubt we stand on the edge of a knife.  Curious formations abound, and give sign.  Take heed…

And then there’s this from today:

And last… the full retrace of the original breakout in the $HUI, Gold Bug Index.  Curiouser and Curiouser:

All the daily charts point to a bounce… not so much this final weekly above, but the circumstances of support could hold here as well.   We have revisited the lows, as I’d feared we should, in order to better stabilize this rebound.   Tomorrow should be interesting.   Be well.

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I figured I’d throw out a rare intra-day post this morning to let you know exactly what I’m looking at to determine my next moves here.   As you may have guessed, my position will largely be dictated by the action of the dollar here as it struggles to emerge from a months long death spiral — whether temporarily or not.  

What will determine that decision in the near term will be the dollar’s actions as it approaches it’s long term cap — the 50-day EMA.  Notice how that line has served to knock the dollar back, even on strong  rebounds like the one we’ve witnessed this last week or so? 

Now, even if the dollar does break that 50-day EMA at $75.22, I think it’s rather unlikely that it will get much farther than the descending 200-day EMA above it at around $78.00.

 What I don’t want to do, however,  is wait around with overweighted positions in silver miners and AGQ while it decided to redescend.   I have enough budding gray hairs from my kids, thanks very much.

So the plan will be to cut back to about a 40% position across the board in the event of a dollar breach of the 50-day.  I will likely get rid of most if not all of my AGQ, though I may keep a stub position just to keep an eye on it.  Again, I may have a lot more slack in that position than you do, so mind your own risk at your acceptable levels.

Keep in mind also that I told the Monsieur at the end of last week, via private correspondance, that I wholly expected a retest of the lows in the silver miners in order to prove  this a more substantial rebound than the “V” we’ve seen thus far.  

That doesn’t mean it’s not hard to watch, of course.   Best to you all.

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[youtube:http://www.youtube.com/watch?v=nLJ8ILIE780 450 300]

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No time to indulge the chicken livers now, lads!

That’s right, buck up, stiff upper crumpets and all that.  Cheerio, wot?  Seriously, silver has broken back over $39 this evening, and if that number holds, I think we see further retrace into next week. Gold is also doing quite nicely at over $1520.

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Tomorrow’s top choices… XG and BAA.

Sure, they are obscure, but so was Jude, and look at that great song the Beatles wrote about him.

Also, the rare earth metals are being purchased again.  Yesterday MCP was getting big “buying on weakness” attention.  I like AVL and QSURF here — especially the latter.

Best to you.

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I say something like this at the bottom of many a PM cycle, but this time the opportunity is so doggone delicious, it merits a special graphic. 

Don’t worry, I’m not going to beleaguer you with multiple charts tonight, as today is a travel day and I’m beat like an unwashed fifties-era poet.   Let this one suffice, as it is, after all, my favourite stock in the PM universe — SLW, Silver Wheaton.   And you luck-dawgs have been able to grab it a deep discount as of last week.  Who knows? You may even be able to get a bit of a re-touch this, week, but alls the better…

What I really wanted to point out was the rarity of this cycle low, and it’s attendant rewards.  Have a look see at what SLW did the last time it came this close to touching it’s 200-day EMA:

That’s right, there was a 59% move up from the last lows to the next sell off, and even more after that selling consolidated at the 50-day EMA.

Now here’s the even better news… SLW’s more volatile brothers, EXK and AG had even greater surges after their most recent visit to the deep lows.   For EXK, the move was from approximately $5.50 to all time highs of $12.50 — an 127% move, while AG took it’s last deep cycle lows of approximately $10.50 to almost $27.00 — a 257% increase.   Keep in mind that these more volatile juniors will be more painful to hold over long periods of time.

Nevertheless, one should learn to live with such fruitful pain.

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I have my 5-year old to thank for giving me the Derby winner on Saturday.  He liked the name “Animal Kingdom,” so we played him across the board.   I must say, however, that I  attribute my choosing the second place winner, Nehro, in the exacta box parley (paid $330)  to my chance conversation with Nehro’s trainer, Steve Asmussen, in the Dallas airport after last year’s Derby, which ended with my decisive judgement that he was “a good guy.” 

So you can see, there’s a lot of science that goes into these Derby picks.  It’s quite amazing.  But truthfully, Animal Kingdom is a noble beast, second only perhaps to officially endorsed iBC show horse Banned, who won decisively the day prior.  Read more about Animal Kingdom here, and cheer him on for the Preakness, won’t you?

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For those of you who hoovered silver with abandon last week, God bless, am I with you.  We will know relatively quickly whether or not we’ve made a wise move “buying the blood.”   My aim is to dump a lot of the AGQ I purchased last week on a break back above $40/oz. or perhaps earlier if the situation warrants.    I think there’s significant chance of a retest of last week’s lows, however, before that happens.  In fact, I would welcome a successful retest as a sign of a more healthy bottoming from this recent artificially created sell-off.

But let’s be limpidly lucid about what happened last week.  There were a lot of cowboys knocked off their horses.   Whether that was a move by the big boys to clear the decks for further ascent — or at least for proper physical delivery — will be apparent by the end of this month, and perhaps even by options expiration day.  

In the meantime, I stand with some dry powder left, but a much smaller amount than at the beginning of last week — less than 10% of my total portfolio.  It’s unlikely I’ll be purchasing anything new unless I see something just ridiculously mispriced in relation to the rest of the market. 

Let’s see what Monday — and the London bankers — brings us.  Carry on.

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33 Is this a dagger which I see before me,
34 The handle toward my hand? Come, let me clutch thee.
35 I have thee not, and yet I see thee still.
36 Art thou not, fatal vision, sensible
37 To feeling as to sight? or art thou but
38 A dagger of the mind, a false creation,
39 Proceeding from the heat-oppressed brain?
40 I see thee yet, in form as palpable
41 As this which now I draw.
42 Thou marshall’st me the way that I was going;
43 And such an instrument I was to use.
44 Mine eyes are made the fools o’ the other senses,
45 Or else worth all the rest; I see thee still,
46 And on thy blade and dudgeon gouts of blood,
47 Which was not so before.

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Sure, we’re all getting a little bit MacBeth-paranoid here.  In fact, many are in full panic and I can understand your feeling.  It was no fun trying to concentrate on track business today (literally) whilst glancing at the ever plunging price of silver, and then gold.

That said, we are in extremely oversold territory here, which should allow those of us who are too nervous to hang on (aye, if the inevitable D-wave is here, we should all be nervous) to exit into the sharp rebound. 

I am still of the mind we are in a severe, if blood-freezing correction, brought on by a number of factors which can only be ascribed to government-regulatory cronyism.  Sorry, I calls ’em as I see ’em.

Take a look at our friend $Silver again after today’s close:

The oversold condition is unmistakeable.  Same goes for AGQ another Bollinger Band crash victim that can make one money right off.

I haven’t seen a stock this oversold since the days we played in IOC, and remember what fun that was?  V-King remembers.   Well, cheer up, it can be fun again, and we can grab some gains here, even amongst the carnage.

Be well, and be attentive, me swabbies — SLW and EXK  look sexy slimmed down like this.  Small bites along the way is how I’ve been re-accumulating monster AGQ.  You may wish to look to that path for any of the stocks you are currently stocking.

I’m tired beyond all belief and Derby is two days away.  Not sure I’ll make it.  More tomorrow.

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