That’s what I am calling last week’s weekly candles across the PM complex, but most importantly in $silver and silver miners.  Let me preface this by stating that I have held my silver and gold miners for about 4 years now.  I even held through the drop in 2018, which saw one of my miners, AXU, go from about $1.40 to $0.68.  So I would like to consider myself a committed bull.  I have been watching the PM complex like a hawk for 20 years.

To further put last week’s price action into context, you have to consider the week prior to last week’s action (the week of Feb. 18).  I’ll use AXU as an example.  First, it had been consolidating in a range established last July–so about 8 months of decent sideways action–signaling a continuation of the primary trend.  It had beautifully maintained price above all key moving averages, including the 50, 100, 200, 300 and 400 WMAs for months.  Ichimoku cloud support was also bullish.  In short, it was poised to explode higher.  I was even willing to contemplate a potential downward move to $1.50-1.60, which would not violate this bullish picture.

The week of Feb 18 saw gorgeous price action.  It moved from $1.76 to $2.20 (about +25%).  Furthermore, the weekly candle initiated an upward bend on the upper Bollinger band, signaling AXU was primed for follow through to the upside.

And we indeed got some, at least initially the next Monday, when AXU hit $2.30, but reversed into the close to close slightly red.  No big deal, and somewhat understandable on a day the Dow was down 1000 pts.  But by Friday AXU had moved to an intra-day low of $1.23 (closing down a whopping 32% on the week), painting what I call the Diabolical Candle.

I panicked out of all of my positions that day, as I had vivid flashbacks of 2008.  My thesis was that the miners would not react again like 2008, because the market would discount the monetary madness that would ensue from a stock market crash/credit event.  Needless to say, for 4 days and especially Friday, I was very very wrong.  Not only that, but much of the beautiful price action over the last 8 months was thrown in the trash last week.  Cloud support, which I may put too much importance in, was violated.  The upper Bollinger band that was indicating follow through the week before actually saw price dip below the lower band, which is bending downward now, indicating follow through to the downside.

Quite simply, I don’t think I have ever seen such an incredible reversal in 20 years of investing.  It’s almost too perfect, like whoever engineered the rise the week before was looking at all of the things I was looking at and thinking how to shatter as many of those things as possible in 1 week of price action.

All this and the price action in $silver, which had similar bullish signals 2 weeks prior, caused me to panic sell.  I am not about to sit through another 2008.  Conventional TA is screaming that there will be more follow through to the downside eventually, with a lower low coming.  But I am really questioning that given how perfect, almost grotesquely beautiful this attack looks.  Swing traders are locked out until a swing low is made.  If price doesn’t make a lower low, that means a swing trader can’t get back in until AXU gets above $2.20.

If indeed AXU and $silver in fact go on to exceed this week’s high (which could play out over weeks of whipsawing action) before making a lower low, I will have to call this one of the greatest engineered shakeouts in history–even better than the week of January 19, 2016, a week that already lives in infamy.  Even if we continue to make lower lows (maybe much lower lows), I doubt I will ever see another candle as diabolical as this week’s.