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Charts speak the loudest…and they never lie…[because they are] the true record of 
all buy and sell decisions executed, coming from the most informed to the least informed. Most of the problems lie with those who form an opinion, and how they choose to impose it onto what any given chart “says.” My understanding of what the quarterly monthly, weekly and daily charts are conveying about the price action of silver is, simply,] “Silver stackers, these lower prices are a gift you should keep on taking. Stay tuned.”
So writes Michael Noonan (http://edgetraderplus.com) in edited excerpts from his original article* entitled Silver – The Precious Metals Bellweather?.
[The following article is presented by Lorimer Wilson, editor of www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Noonan goes on to say in further edited excerpts:
We prefer to follow the message of a chart, not lead or predict what it may, or may not do. There is a high degree of logic in charts, and we try to draw conclusions from them… As a road map, reading charts is superior to fundamentals, opinions, and mechanical technical tools which all use past tense information, impose it on the present tense, and expect it will divine the future tense.
To start, everything in a chart is potential until it is confirmed. The adjective bottoming, as in ongoing, is used because a bottom of any market is a process. It does not happen in just one day, and it can sometimes take several months to reverse a down trend. Always keep that in mind, and let the market prove itself to prevent needless risk exposure…
It appears that silver is at a potential bottoming area, and very close attention to how price develops from today forward may provide key information from which one can profit.
Silver – Quarterly Chart
It can be seen from the Quarterly chart [below] that the current correction has run deep, but price is nowhere near taking out the 2008 swing low, from which the bull move up began.
Few ever look at a Qtrly chart, but the few who do are in the “smart money” category. Smart
money does not care about daily charts (most everyone else does)… because they are only interested in major moves, and it is these longer term charts that show them best.
Longer term charts are used for context, to put a market into a perspective, ultimately for making a trade determination. Clearly, the trend in silver, and gold, is down.
What we can learn from the monthly is the fact that price has reached an important support area.
Silver – Monthly Chart
The current price has entered the identified support, and we explain that support is an area, not just a specific line or price. Consequently, what becomes important, as the lower time frame charts provide greater detail, is to watch how price responds/reacts to the target area. What we are looking for are clues in a change of behavior, for it is a change in behavior that leads to a change in a trend.
Silver – Weekly Chart
The weekly more clearly shows the area of support at which silver has now reached.
A support line was drawn only on the weekly to show the importance of the $26 level, but $26 shows up on each of the higher time frames, and from that, we know when $26 is retested, it should offer resistance, certainly the first time around. We also noted how the Ease of Downward Movement, [EDM], sliced right through it, once broken.
Price is always important, but when coupled with volume, it can be the most telling of all information, and it is always right up to date, for everyone to see as it develops. Whenever you see high volume moves, it is your key that smart money, [SM], is active in the market. SM moves in such volume, sometimes it just sticks out. For the most part, SM tries to hide its intent, but it is almost impossible to do at important market turns.
The public and speculators do not create high volume; they react to it. Everyone knows it is axiomatic that SM sells tops and buys bottoms. The public is always on the other side.
Here is where the logic comes in. Note the first high volume bar in June (we were off one bar to the left when we drew it in). Price is breaking under a small congestion area. The next highest volume bar, just to the left of the oval, is sharply higher than the first. It is when price broke under 21 and 20 on the same day. So many weak longs and stops were washed out. Guess who was on the other side?
Within the oval, there are four trading days to discuss. Red volume bars means the close on that day was lower than the day before. Compare the first red price and volume bar with the one 4 days earlier, when price broke under 21 and 20. The volume of the first bar within the oval is almost equal to the down volume bar from 4 days ago, but compare the size of the trading range. The first price bar in the oval is much smaller. Why?
Volume increased sharply, and the bar was smaller. What the market is letting us know is that buyers entered the market and were more than matching the effort of sellers. Were that not true, the price range would have extended lower.
The 2nd bar in the oval is much less subtle. Volume was greater than the day before, but look at the tiny price range. Buyers stopped sellers cold! It was like opening a basket at the 18.50+ area, and the buyers said, “We will take as much as you have to offer.” For all of that increased effort, (volume), sellers were totally spent. Buyers were totally in control at a price level and trend that had been dominated by sellers. There is more!
Next day, the highest contract volume and highest volume in months produced a price bar that rallied and closed on the high, producing an Outside Key Reversal Day, [OKR]. This could be the bottom. It needs to be confirmed. If it is not the bottom, the market is telling us we are very close to seeing one. Either way, what we saw two weeks ago was an important change in market behavior.
If we were ego-driven and wanted to impress, we could say this is the bottom. It may be, but we still will wait for confirmation.
We are seeing a price change from weak hands into strong hands in the paper market. The 4th bar in the oval was another up day. Volume was the smallest of the 4, and note how the price range narrowed, and the location of the close was under mid-range the bar. Buying had been expended is what that bar was saying, and we see price corrected right after. Most of the buying has been from short-covering.
The last bar on the chart shows a down day, wide range and high volume. While price did decline, it did not make a new low for the increased effort.
We now get to watch more developing market activity that will confirm, or not, the logical conclusions extracted from the market itself. Now news. No opinions. No mechanical tools. Just price and volume that have combined to tell the story, straight from the market’s mouth.
Silver stackers, these lower prices are a gift you should keep on taking. Stay tuned.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
*http://edgetraderplus.com/market-commentaries/silver-the-pm-bellweather-possibly
Other Noonan Articles:
1. Noonan: Charts Suggest Potential Support for Gold Down at $1,040 to $1,100
If you want to make rabbit stew, first, you have to catch the rabbit so hopefully, first, we’ll see some concrete signs that a bottom is in before the regurgitation of “Gold is going to $10,000!” starts showing up in a host of new articles pandering for attention. The best way is to decide for yourself…so let us go to the most reliable source, the market, and see what the prices of gold and silver have to say about what everyone else has been saying about them. People have been known to exaggerate, even lie in their “opinions,” but the market never does either. Read More »
2. Noonan: Charts Suggest NO Ending Price Action In Either Gold or Silver – Take a Look!
Not one Precious Metals guru has gotten anything right in the last 18 months. All have been calling for considerably higher prices. Over the past several months none called for sub-$1,300 gold and sub-$20 silver. Crystal balls do not work and never have. When it comes to markets, anything can happen [but the charts convey that] there is no apparent ending action suggesting a selling climax or even a cause for a reaction rally. Take a look. Read More »
3. Charts Provide Certainty – Not Opinion: Here’s What They Say About Gold & Silver
Charts provide certainty, for they are absolute and the final word at the end of day, week, month, etc. There can be no dispute over a bar’s high, low and close, plus the volume, for whatever the time period under consideration. There is a high degree of logic within them and, while there can be differences of opinion over their interpretation, establishing a fixed set of parameters can mitigate most any potential dispute. So just what are the charts saying about the current trend in gold and silver? Let’s take a look. Read More »
4. Gold & Silver Rules of Engagement: IF This Happens, THEN Do That – Here’s Why, Here’s How
Never go against the market. It does not matter what your beliefs are…It does not matter what the fundamentals are either. [What matters] is the TREND! Once you know the trend is up you need a game plan on how to participate from the buy side and when the trend is down, a plan ion how to participate from the short side. If there is no trend, then the odds are not favorable for either game plan.[So exactly what are the charts saying about the trend in gold and silver these days? Read on!] Read More »
5. Gold & Silver: Don’t Wait for the Bottom – “Average Down”. Here’s Why
You cannot control what others do, especially those in power. You can control what you do. Just keep buying, regardless of price, because if/when the price of gold and silver were to go lower, you may not be able to buy. If/when the price of gold and silver were to go higher, it may be at such an accelerated rate that any price in the past few years seem cheap. Words: 550 Read More »
The next chapter [in gold and silver] has yet to be written. One thing is likely to be certain, it will get uglier. The public will not be prepared for what could take a few more years to develop, and the potential for yet much lower prices for both gold and silver. Read More »
7. What the Charts Say About the Future Price Action of Gold & Silver
The monthly silver chart does not reflect what could be viewed as ending action for the decline. If/as price rallies, it may be more of a futures selling opportunity than a sign of recovery. As the structure stands, odds favor lower price attempts. Read More »
8. The Best Article On “What Happened to the Price of Gold & Why?”
Everyone personally holding physical gold and silver, as we have been recommending, has no margin call to meet and no reason to sell. This is a temporary situation, and it will pass. Now is not the time to panic, as that is the intent of the central planners/bankers in forcing gold and silver through strong support levels. Stay the course. To the extent you can, continue buying the physical metal. Read More »
10. Gold & Silver: Go “Get” While the Getting is Good! Here’s Why
There will come a time, and based on current charts no one knows when, that prices for gold and silver will become prohibitive and/or governments will do what they can to inhibit (steal) ownership, maybe even making it criminal to own or use in transactions. [That being the case we advocate that you go “get”] physical gold and silver [while the getting is good], consistently and at any price. The point here is not to “make money,” but to preserve and/or create wealth. [Let me explain.] Read More »
Truly, based on the supply and demand fundamentals and along side the most egregious price engineering since the time of the Hunts, we are witnessing the sale of the lifetime.