Shiny Metals

11:15am EDT: While we are enjoying the whipsaw from hell I thought I’d share something completely different and more related to our long term outlook on things:

Someone mentioned the gold/silver ratio in the prior thread and rightfully stated that a rising ratio was bearish for the economy. What I’m seeing right now is either the conclusion of long 5th wave or the finale of a 3rd – bear in mind that commodities have a habit of extending their 5th waves, whilst in equities it’s usually the 3rd. See both tentative counts above – it’s preliminary but seems fairly clean.

In any case – looks to me that we have now switched into a bullish trend in the Gold:Silver ratio – meaning that Gold will continue to ‘outperform’ Silver – I put that word into quotes since in reality Silver will drop faster than Gold. I still expect Gold to breach its 680 low either this year or early next year.

But the real action is in Silver – if you are interested in trading the shiny metals then consider the chart above as this is how I see things unfold. Right now we’re pretty shot to hell and I am waiting for a meaningful bounce to sell some ZI futures. I won’t touch SLV or GLD options ever again – even ZI or ZG options lose too much theta during the whipsaw periods. A good friend of mine who has traded Gold for over a decade just had to watch his ZG puts expire after which Gold started to drop hard.

While I’m typing this equity futures are dropping hard – I basically decided to fade all this nonsense until we either breach SPX 870 or touch 907. Looks like we’re getting the former right now – what a mess of a tape.

2:23pm EDT: I snoozed a good entry on APPL – might still be good on a little drop:

AAPL – 1-hour chart.