More Upside for SLW and GLD

When we view Silver Wheaton (SLW) from afar and condense the price action, the pattern that emerges off of last April's peak at 47.60 argues strongly that a complex intermediate-term correction ended at the Oct 4 low of 25.84, a decline of 46%. That was followed by a powerful new up-leg that within the past week has hurdled key resistance at 37.35/40.

From a pattern perspective, we can make the case that the current up-leg off of the Dec 29 low at 26.85 represents the "right side" of a big "W" -- or Double Bottom formation that was putting intense upward pressure on 37.35/40 on the way to my next optimal target zone of 42.30/60 and then to 44.00/30.

At this juncture, only a decline that breaks back beneath the Apr-Feb resistance line at 38.16 will compromise the current upside breakout and thrust towards 42.50.

Looking at gold, the SPDR Gold Shares (GLD) is heading for a confrontation with its prior significant rally peak at 175.46 (from Nov 8), which if hurdled and sustained should trigger upside follow-through to 182.75-183 relatively quickly.

At this juncture, only a decline that breaks 171.50 will compromise the current upside acceleration phase.