BUY ZSL $18.30 -- Update Gold, Miners, Silver and SP-500

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I took an initial position Friday afternoon in Proshares Ultrashort Silver ETF (ZSL) at $18.30.  This 60 minute chart shows that my timing was well intentioned but honestly, it did not work out quite as I hoped. As you can see I was looking for an upside break of the True Strength Index (TSI) indicator. But after my purchase the indicator bounced downwards and took out the lower trend line, leaving price to close for the day at $17.95. A little more patience and confirmation of both a favorable trend line break and ZERO crossover would have served me well.
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Click on any chart to ENLARGE
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My outlook on gold, miners and silver continues to be bearish. This point of view is strongly influenced by my observation of past price performance. The ebb and flow of sentiment seem to yield similar price movement and I will show you how this analysis seems appropriate.

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Let's begin with this daily chart of the World Gold Index (XGLD). I notated the previous intermediate cycle tops and bottoms of the past 2 years, then studied how price has behaved during the period separating the top and the corresponding intermediate cycle bottom.
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My observation is that there is a surprisingly repetitive pattern, as follows:
1. price tops then falls
2. a new up trend line is established, which fails
3. a second new up trend is attempted beneath the previous trend line (which forms a bear flag).
4. this bear flag fails and price moves down to make a final low
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I would also like to point out that each of these recent intermediate corrections bottomed when gold reached its 150 dma (green moving average line in the chart).
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My thought is that we are soon going to conclude the bear flag phase and then gold will head lower until it makes a final intermediate cycle low.

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This is a daily chart of the Amex Gold Bugs Index (HUI--X). The same repetitive pattern of price behavior seems to apply at the same intermediate cycle tops and bottoms.
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The twist this time, however, is that it appears the miners have already completed the entire corrective process. However, I know that in past intermediate cycle corrections the miners always bottom within a few days of gold.....and if gold has not bottomed, the miners have not either. My hunch is that miners will rally soon with the stock market, then put in a lower low.

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The next chart up is a daily of the World Silver Index (XSLV). This analysis is more of the same song, second or third verse. I expect silver to let go of the bear flag and continue falling.
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My other concern about silver is the pennant/wedge pattern that has developed.  In a matter of just 4 trading days, silver plummeted from near $50 to $32.  Longs who blinked missed their chance to get out.  They are trapped and should price begin to slip, I imagine they will be extremely motivated to sell.
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And finally, let's look at the Standard & Poors 500 (SP-500) first with a weekly chart then conclude with the daily chart.

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As I believe we are now heading into the next major down leg of the secular bear market, a peek at the previous down leg may be instructive.
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I think a decent case can be argued that a head and shoulders pattern existed at the top of the previous cyclical bear leg in latter 2007. What followed in early 2008, as we all know, was nothing short of brutal.
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Perhaps coincidental, but I can envision another head and shoulders pattern setting up at the present time. Price is likely to rebound soon but I seriously doubt it can be sustained - particulary with the conclusion of QE2.

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This daily chart hypothesizes that a rally of about 2 weeks may occur next.  For what it's worth, that would place the left and right shoulders exactly 9 weeks apart from the head.  Don't you love that symmetry?
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My TSI Trading record has been updated to reflect my purchase of ZSL.