The last few weeks we have seen higher openings on Monday mornings followed by midday reversals and tuesday takedowns. Perhaps this week we get the smashdown out of the way early and then recovery in the afternoon? I do not believe any of this is normal market action, and instead there is a concerted effort behind the scenes to manipulate the sector through dumping of paper silver and shorting of the juniors. For high frequency traders volatility is a friend. The manufactured volatility in the sector is probably making a lot of money for those who know which way the market will be driven and when.

ECU is a small cork on a very unsettled pond. I think the downside is already priced in. The Japan quake has given the Cartel a free shot to pound this market as all commentators will assume its just deleveraging that is causing the market weakness. I think the aftermath of this quake is extremely dollar bearish and PM bullish, and the heavy intervention in the sector today is a pre-emptive strike to manage expectations and drive as much spec money out as possible. When the buyers step back into this market the sector will recover lost ground quickly. ECU should participate in this rally.

My guess is the reason the market reverses on Monday afternoons is the manipulators start covering and then buying puts/calls to benefit from the follow through the next day. Watch this afternoon for the juniors to stabilize and the metals to start trending back into the green.

cheers!

mike