Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17
7 Signs You Should Add Gold To Your Portfolio Now - 19th Jun 17
US Bonds and Related Market Indicators - 19th Jun 17
Wireless Wars: The Billion Dollar Tech Boom No One Is Talking About - 19th Jun 17
Amey Playing Cat and Mouse Game with Sheffield Residents and Tree Campaigners - 19th Jun 17
Positive Stock Market Expectations, But Will Uptrend Continue? - 19th Jun 17
Gold Proprietary Cycle Indicator Remains Down - 19th Jun 17
Stock Market Higher Highs Still Likely - 18th Jun 17
The US Government Clamps Down on Ability of Americans To Purchase Bitcoin - 18th Jun 17
NDX/NAZ Continue downward pressure on the US Stock Market - 18th Jun 17
Return of the Gold Bear? - 18th Jun 17
Are Sheffield's High Rise Tower Blocks Safe? Grenfell Cladding Fire Disaster! - 18th Jun 17
Globalist Takeover Of The Internet Moves Into Overdrive - 17th Jun 17
Crazy Charging Stocks Bull Market Random Thoughts - 17th Jun 17
Reflation, Deflation and Gold - 17th Jun 17
Here’s The Case For An Upside Risk In The Global Economy - 17th Jun 17
Gold Bullish on Fed Interest Rate Hike - 16th Jun 17
Drones Upending Business Models and Reshaping Industry Landscapes - 16th Jun 17
Grenfell Tower Cladding Fire Disaster, 4,000 Ticking Time Bombs, Sheffield Council Flats Panic! - 16th Jun 17
Heating Oil Bottom Is In.(probably) - 16th Jun 17
Here’s the Investing Reason Active Funds Can’t Beat Passive Funds—and It Worries Me a Lot - 16th Jun 17
Is There Gold “Hype” and is Gold an Emotional Trade? - 16th Jun 17
The War On Cash Is Now Becoming The War On Cryptocurrency - 15th Jun 17
The US Dollar Bull Case - 15th Jun 17
The Pros and Cons of Bitcoin and Blockchain - 15th Jun 17
The Retail Sector Downfall We Saw Coming - 15th Jun 17
Charts That Explain Why The US Rule Oil Prices Not OPEC - 15th Jun 17
How to Find the Best Auto Loan - 15th Jun 17
Ultra-low Stock Market Volatility #ThisTimeIsDifferent - 14th Jun 17
DOLLAR has recently damaged GOLD and SILVER- viewed in MRI 3D charts - 14th Jun 17
US Dollar Acceleration Phase is Dead Ahead! - 14th Jun 17
Hit or Pass? An Overview of 2017’s Best Ranked Stocks - 14th Jun 17
Rise Gold to Recommence Work at Idaho Maryland Mine After 60 Years - 14th Jun 17
Stock Market Tech Shakeout! - 14th Jun 17
The #1 Gold Stock of 2017 - 14th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Taking Stock Of Silver Stocks – SLW, PAAS, CDE, AG, SSRI, HL

Commodities / Gold and Silver Stocks 2014 Feb 05, 2014 - 10:40 AM GMT

By: Michael_Noonan

Commodities

We are of the simple opinion that any substitute for the real thing is never as good a choice as the original, even when it comes to Precious Metals. There are so many other considerations that enter the picture when regarding mining stocks. One of the primary ones is management, what it can do to a stock’s performance separate and apart from its underlying purpose, silver production. There can be poor management, mismanagement, decision-making related to stock performance instead of getting the maximum performance out of its mining operations, overspending, misspending…you get the idea.


Here is a reading of some of the top silver mining companies from a chart perspective. Charts show the best bottom line results from all observations one can make in an assessment of any company. While we see it as a way of cutting through everything else, this shortened version of viewing a company from a purely results-oriented perspective, via reading a chart, should not be quickly dismissed. In fact, from this kind of look, one might more easily see the value in dismissing some of the stocks as buy candidates.

Another important consideration to be held in mind is to always buy strength over weakness. Do not buy a stock because it is low, and you think it may rally and play “catch-up” with the rest of the market. There are very valid reasons why any stock is weaker, relative to other companies in the same sector.

In no particular order:

However one wants to view SLW, the performance is slightly weaker to the metal itself. It is a positive that the last sell-off has taken 17 weeks to retrace the prior 9 week rally. The last 4 weeks on the chart show a clustering of closes. A clustering denotes balance between the efforts of buyers and sellers. From balance comes unbalance. A look at the daily chart may give a hint as to which way the unbalance will go.

It seemed a little more positive on the weekly as the daily chart shows issues for buyers to overcome more than for sellers. The arrow points to an ease of movement lower, 8 TDs ago, [Trading Days]. Buyers have not been able to regain ground lost in a single day over the next 7 TDs of effort.

The position of price, under a 50% retracement, is relatively weak. It does not mean that buyers cannot overcome resistance, but they have to put in a better show, now.

We do not show the 50% retracement area for PAAS, but it is apparent from the eye that price is not even close. The gauging of how price is, using a 50% mark, is a general guide that demonstrates overall weakness, being unable to rally to that level, or strength, when price can rally to, and even exceed a half-way retracement.

The sloping down trend line was broken, last July, but the breaking of a trend line is much less significant than overcoming a horizontal resistance supply line; the one at $14. The designation of an “Axis Line” is one where previous price support has now become one of resistance.

Here, you can see the validity of horizontal lines being significantly more important. The TR, [Trading Range], from last August led to a decline, so expect it to act as resistance whenever price rallies back to it. That rally occurred in January, and price encountered selling because those sellers who went short, last August, are defending their territory, as it were.

What is positive about where PAAS met resistance, currently, is that price has not sold off as it did last August. It appears buyers are meeting the effort from sellers and preventing the market from going lower. Sellers have the edge, based solely on overall market conditions, so it is up to buyers to overcome sellers to gain control.

On the scale of relative strength or weakness, PAAS, for example, is stronger than CDE. Given a choice between the two, PAAS should be bought over CDE. Compare where PAAS is trading over the last several weeks, relative to where CDE is trading, and the concept of relative strength becomes very clear.

Bearish spacing occurs when the last swing rally high is under the last swing rally low, and the two horizontal lines, one above 20, the last swing low from the end of 2012, and the line above 15, showing the last swing high. Whenever there is a space, it indicates a much weaker market because sellers did not need to wait and see how the last swing low would be tested. They were aggressively selling into the rally above 15, leaving the telltale space.

The negative read on the weekly is amplified by the closer detail on the daily chart. It speaks for itself.

The chart comments need not be repeated. AG is laboring. The inability to rally even above a 1/3 retracement speaks to the general weakness of this stock. Mention was made from the outset that reading a chart cuts through all other considerations, particularly fundamental ones, and gives a clearer picture of how a company is faring on its own, and more importantly, relative to other companies in the same sector.

Where are the buyers?

The swing highs and swing lows were connected to give a slightly different way of looking at how a stock is performing.

Where the weekly SLW seemed that it would lead to a more positive look on the daily chart, which the daily failed to do, SSRI has a more positive look on the daily than one might have expected from viewing the weekly.

There is still some work to do for buyers to overcome sellers, but the direction of price, since the last swing low, is at least pointing upwards. How SSRI is able to recover from the recent sell-off, or not, will give an important clue in what to expect, moving forward.

Look at where price is, relative to resistance at the $4 level. This is another relatively weak performer and one that should raise questions as to why it should be bought, or even held.

The takeaway from this exercise is to 1. demonstrate the importance of the ability to read a chart, based solely on price and volume activity. Note that no reference was made to any mechanical technical tools, like RSI, Moving Averages, etc. They are not accurate as to timing, and if not, why bother with them? 2. The importance of relative strength when assessing whether to buy one stock over another within the same sector, or even buying in one sector relative to another one that is clearly performing better.

The objective is to be profitable, and the above analysis has provided examples of how one goes about improving one’s effort in attaining that objective.

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife