Most silver mining stocks are displaying falling knife trading patterns. Although it looks tempting to go bargain hunting I don’t think it’s a good idea to buy just yet. SLV, the Silver ETF looks like it wants to hit that gap in the 25 $ area. SLW – Silver Wheaton and AUMN – Golden Minerals two very strong silver stocks which traded at all time highs not so long ago have yet to print convincing reversal candles in order to attract buyers. As I outlined in my AUMN chart annotations, here’s what I would look for prior to committing new funds:
- A clear reversal candle with a long tail. Candlestick theory refers to those as ‘hammers’.
- Huge volume. Read: capitulation type of volume.
- All of the above occuring while the stocks hits an obvious support area.
Like I did with APKT – Acme Packet in order to gauge the health of the S&P 500, AUMN – Golden Minerals is one way to so within the Silver Sector. I could have used SLW as well.
Up-to-date AUMN – Golden Minerals chart on my public list.
Of course AUMN, SLW and the rest of the pack could move up without putting in the kind of reversal candles I described above. The volume pattern though suggests odds for a high volume shakeout are high. Let’s see if the shakeout indeed occurs before the stocks can move up again. In any case, be patient and wait for good entries. Never chase. There is never a shortage of opportunities in the market.
Ausdauer wird früher oder später belohnt – meistens aber später. – Wilhelm Busch
My public list with all my charts can be viewed here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469
Buenas noches!
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