It seems many are expecting the PM sector to reverse higher at the next fed meeting – this coming Wed., March 21, which is typical price action, and then its on to resuming the secular bull market in PMs that has been in abeyance since 2011.  The COT report is certainly favorable in the case of Silver.  ABX appears to be bottoming, so it seems like a logical call.  But the sector has a way of punishing those expecting the obvious.

Below is the combo weekly chart for SLV, GLD, and HUI.  Please note that the HUI has broken below and back-tested its intermediate term support line, which – believe it or not – sets up a (inverse cup & handle) downside target of $35.

I’m not saying its a given that the $HUI will fall to $35, but – if pm stocks are in fact leading the metals, then I think we should at least expect a return to the short term green support line for GLD, to about $1,280 for $Gold.

In that case, what would happen to Silver?  It’s possible, with the GSR already above 80 – that Silver will also return to its (green) intermediate support line – where it has already bounced twice.  However, each time it has done so Silver did not achieve a higher-high, representing a non-confirmation of Gold’s higher high.  Thus, even if $Gold falls and finds support at $1,280, its possible that Silver will fall to the blue dotted support line, to at least the $14.85 – 15.00 range.

Please note that I added the DPO indicator and Bollinger Band Width indicators to this chart, removing the MACD indicator which has been trending flat for months and is useless.  The DPO indicator reflects an average weekly cycle of about 22 weeks for silver, same as gold.  Some cycles have been as short as 18 weeks.  However, the present cycle is only on week 14, which indicates at least another 4 weeks of downside price action before the current cycle bottoms.

The BB Width is presently at historically low levels, indicating that a major move is coming.  Hope I’m wrong, but I wouldn’t be surprised if the move ends up being lower, contrary to expectations, for one last punishing move to obliterate all remaining bullish sentiment in the sector, before finally leaving the station and launching into the mother of all waves – wave 3 of 3.  Are you mentally, emotionally, and financially prepared for such a possibility?