Posted on Oct 24, 2023, 08:23 by Dave Toth
In the roughly 166 weeks since Aug’20’s 2089 all-time high, this market has spent only eight weeks trading at levels above $2,000. That is less than 5% of the time. Given this fact, and with all due respect to some really long-term bullish prospects, traders, and especially shorter-term traders with tighter risk profiles should take note of waning upside momentum on a short-term basis over the past week or so as detailed in the 240-min chart below. By virtue of Thur’s continuation of this month’s impressive, impulsive reversal, the market has defined smaller-degree corrective lows at 1957 and 1921.2.
To maintain the risk/reward merits of a continued bullish policy “up here” around the “psychological” (although we never have liked this term) $2,000 level, the market would/should be expected to sustain trendy, impulsive behavior higher and ABOVE these corrective lows. Its failure to do so won’t negate any longer-term bullish counts, but it would break this month’s uptrend and leave this market increasingly prone to a corrective rebuttal to this month’s rally that, given its magnitude, may be equally protracted enough to warrant the paring or neutralizing of bullish exposure by shorter-term traders with tighter risk profiles. Per such, we’re defining 1957 and 1921.2 as our new mini and short-term parameters from which shorter-term traders are advised to rebase and manage the risk of a bullish policy and exposure.
The daily chart above shows this month’s steep, uninterrupted spike and poke above the vaunted $2,000 level that, just like in late-Jul, it has thus far failed to sustain. Combined with this area also being the upper-quarter of the past 38-MONTH lateral range, it’s not hard to question the brisk/reward metrics of maintaining a more aggressive bullish policy and exposure “up here”. Maintaining a bullish policy “up here” IF the market confirms a bearish divergence in short-term mo below 1957 and/or 1921.2 would have to be considered a longer-term bet on the market blowing away the past THREE YEARS’ highs around the 2085-to-2089-area. And the RISK of such a longer-term bullish bet is commensurately larger to 06-Oct’s 1823.5 low because once below 1957 and especially 1921.2, the correction’s downside potential thereafter is indeterminable and potentially extreme.
These issues considered, a bullish policy and exposure remain advised with a failure below 1957 and/or 1921.2 deferring and threatening a bullish count enough to warrant paring or neutralizing bullish exposure. Bulls not taking defensive measures below these thresholds are identifying themselves as long-term commercial players or investors and acknowledging and accepting bull risk down to 06-Oct’s 1823.5 low. In lieu of weakness below at least 1957 and especially 1921.2, the trend remains up on all practical scales and should not surprise by its continuance or acceleration, eventually to new all-time highs above 2089.
While or especially because the silver market remains deep within the middle-half bowels of its major 3-year lateral range where the odds of aimless whipsaw risk remain high, the developing potential for a bearish divergence in short-term momentum is an increasingly important development. A failure below Thur’s 22.785 minor corrective low will confirm this divergence and break this month’s uptrend from 04-Oct’s 20.85 low. Per such, we’re identifying 22.785 as our new short-term parameter from which shorter-term traders with tighter risk profiles are advised to rebase and manage the risk of a bullish policy and exposure. A failure below 22.785 will define Fri’s 23.88 high as the end of a 5-wave Elliott sequence up from 20.85 and expose a correction lower of indeterminable scope that is sufficient for shorter-term traders to circumvent.
This tight but objective bull risk parameter at 22.785 is particularly important given this market’s position still deep, deep, deep within the middle-half bowels of its massive but lateral historical range where the odds of aimless whipsaw risk are approached as higher, warranting a more conservative approach to directional risk assumption.
These issues considered, a bullish policy and exposure remain advised with a failure below 22.785 required to defer or threaten a bullish count enough for traders to move to a neutral/sideline position to circumvent the depths unknown of a correction or reversal lower. NOT taking defensive measures on a sub-22.785 failure acknowledges and accepts longer-term bull risk to 04-Oct’s 20.85 low.