Deflation whiff in the air as Silver threatens head & shoulders top, and Oil has difficulty regaining momentum under this resistance

The whiff of deflation may be returning as oil shows difficulty getting back above resistance (indicated around $74 on the WTIC chart below). At the same time, the bigger-picture pattern in silver now looks like a bearish head and shoulders forming with the right shoulder almost complete. If this pattern continues to play out, it can pull silver down into another cycle low, and signal a similarly bearish path for gold and other inflation-hedge assets. Investors in oil, gold, silver and the like might strongly consider sell-stops at the recent swing lows (or at tighter levels nearby, or just hedging, depending on approach).

The silver chart shows SLV (weekly) with the head and shoulders forming since early this year. Remember, some head-and-shoulders patterns do play out! If this one does, it will feel bearish down to the neckline - then finally trigger under the neckline, with a projection for a further comparable drop.