Well Bernanke showered upon us a chunky 50 BP cut, and the markets responded swiftly. After a brief volatile gyration, gold, silver and FX began making strong gains. Gold is at record high's (you'd have to look back many years to match today's high), but because silver is still shy of May 2006 high's, it is easier to estimate resistance levels. Since last year, I incorporated a concept called
"Box Theory", and looking at the silver chart below, once could detect a roughly $0.400/oz box range. Today silver is at the top of a box (yesterday's high), and it is a matter of time before we see a trend of boxes on top of another.
Considering that Bernanke has just unleashed significant inflation upon the markets, as shown in record commodities and FX prices, we are bearish long term bonds. Bonds have rallied significantly since August, and a bearish triangular formation has formed over the past couple of weeks; most likely just in time for a sell-off in fear of unexpectedly higher inflation.
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