I know the trend can change very quickly, and I do expect some form of counterattack soon, but as I mentioned last week, SLW and FR are very good short term indicators for the entire sector. Often when silver is trading higher and the juniors are looking good, those two stocks will be underperforming and that is a good sign that a raid is on the way. On the flip side, when they are in the green even on a bad day for the sector, a turnaround is close at hand. Both are well into the green right now and posting solid gains for the week. This suggests to me that we need not fear a short term retracement.

I know, you cannot gauge an entire sector off the performance of two stocks. However, if you look up the charts for each one its very clear they are excellent barometers for the direction of the group. SLW back up $1.50 and more on the day tells me the spot silver price is not going in the tank yet. I think the current triangle formation for silver has the upper range pegged at $37 or so. My expectation is we hit that and bounce lower before we get a breakout back into bullish territory.

All of this is constructive however. I do not want to see a recovery too strong and too quick. Just a nice hard bounce here off the lows to disappoint the bears and cause some shorts to cover, as part of the base to support a run back to $40 before the end of July would make me very happy.

cheers!

mike