The Knife Catcher

It looks like we are seeing the bottoming in all three of our friends…gold, silver and crude. All three have found some solid support and have moved higher, partly because of the lousy ADP number (more on that later).

Gold and crude may move higher from here and not retest the levels they found yesterday and overnight. Silver, because the decline was so sharp and severe at almost 20%, will likely need more time and will probably need to make a double-bottom type of base. A “V” bottom is possible, particularly when you consider the high probability of a fast, short-covering recovery. But with all the talk about “tops” and “bubbles”, I suspect that instead we’ll see another probe down below 41 and toward 40.50 before the recovery begins.

Here’s gold. Note the solid support that materialized near 1530. I had given you 1525-1530 so that worked out pretty well.

Crude is holding nicely, too. I’d mentioned yesterday at this time that 110.50 looked pretty good as support. It got to 110.15 overnight. Now, we need a move back UP through 111 to start getting interested.

And here’s silver. Again, its found buying support just above $40. Let’s see how today plays out before we go grasping at the knives.

Regarding the POSX and the ADP report. As you know, I’ve been expecting the standard BLS BS monkey business to goose the dollar on Friday. The ADP report this morning obviously calls that into question…kind of. This could just as well be a head fake where ADP sets up the SPIN media for disappointment Friday only to have the government-issued BLSBS “surprise”. After all, why not suck in some more dollar shorts today only to squeeze them on Friday to exacerbate the POSX calvin? Just something to think about.

Lastly, I’ve been getting lots of emails regarding my $65 target for silver in June. Everyone wants to know if that number is still valid after the recent drop. Frankly, its not. I came up with $65 based upon recent pattern of drops and rebounds in similar timeframes. As you know, I’d expected a pull to $45 not $40. In light if this, we have to at least lower our target to $60 if not a little lower but even that’s just a guess at this time. Let’s see how the next two weeks play out. Pattern suggests that the UP move as we head toward first notice day in June will begin somewhere between the 17th and 24th of May. I’ll have a much better idea of what to expect by then.

OK, that’s it. This day should be fun to watch. Much of the recent damage has been done beginning around noon EDT each day. Let’s see if we can hang in there today through that time period. TF

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