A friend asked about SLW and since this week seems to be PM's week with all the commentary, I thought I would add my own 3 cents worth......So before I get into MHO on SLW perhaps we should check on the underlying physical metal . BTW I do not own SLW at this time. I have several times in past years, but not today.
On the physical silver........
Silver support and resistance points via a chart.........
One chart is 3 year daily, with the major high in March '08 as starting spot for major downtrend line that comes down and picks up one major peak at June'09 @ $16. The current prices have broken out above this horizontal price resistance, so that is very bulllish. The other point is that the current price has broken out over that big downtrend line. which crosses at about $15.50. Looking from the low price at November '09 at aprox .$8. and a bit, I started the uptrend line from that point and it picks up the low price in July '09 and moves up. This line is the major uptrend line and is the key line for any trader who wants to be in or out of silver. It is also called the Power uptrend line and unless this line is broken, will continue on what is an internediate trending up move that by the looks of it could challenge the old highs of $21 in this move. Not a certainty, but as long as this power uptrend holds in place. I drew a 3rd line which follows the general direction of the power uptrend line, except it is the upper channell of the trending move and will form resistance as the chart and time moves outwards.
The RSI is currently overbought, but in a bull period it is noted that an RSI can remain over 70 for quite a long time and even hit 80 plus. The MACD is in bullish mode over the zero line and pointing up. This says the current 12 dma prices are much higher than 26 dma. which is bullish. That is it for lagging oscillators. So in summary, unless that power up trend line breaks, the bullish posture is still in place. There is a very large triangular shape pattern which broken to the upside also...that does have potential for a longer trending move. Keeping in mind, patterns are only possible outcomes and not guarrantees. Chart sure looks positive no matter what way you view it, short or long.
I am not a computer afficiondo, so excellent annotated chart I print screened and copied I can't make it onto this blog...........so no lines etc.
SLW is company that came out of Goldcorp a few years back on a model that buys up silver production from precious metals miners, like Goldcorp , Barrick and others and basically hedges that silver for a big upfront payment that allows them to bypass the banks and continue with their main business which is gold mining. Last year SLW secured another 11 million ounces of silver at a cost of $3.94 an ounce. Considering we are at aprox, $16 oz, that is like printing money. They are not miners or explorers and as this current bull market in precious metals expands over time....to say 2015, costs of mining will be all the more important and one of many reasons SLW will outshine most of the silver metals shares.
Some of the best precious metals people in Canada also think so. It is MHO that the best type of opinion is from successful money mgrs, who actually buy and sell every day the item in question. As far as precious metals go, the top fund mgrs in Canada are arguablly:
RBC - London Life - Sprott - Mackenzie
These 4 are long time precious metals experts and all of them have Silver Wheaton as one of their top 10 holdings. I would say that is a ringing endorsement from the elite of precious metals people in Canada.
Mgmt projects that the silver sales in the next 4 years should increase by 250%. And be selling by 2013, over 40 million ounces of silver per year. That my friends is a tonne of silver literally. Top producing silver mines in world today produce under 10 million ounces per year, so you are talking huge. If they hit that target, the SP will not be $13 to $14.
So, that leaves us with the TA on SLW.......
How does this shape up?
This is a linear chart, so all moves are equal spaced. A move from $10 to $12 is the same as $2 to $6.
What we can do is take the low of this short term period chart which is around $3 Dec. '08 and start our uptrend line and catch the other low point in July at aprox. $7.50. Not ideal, as you like to have 3 touch points, but we do have the lowest prices moving upwards, so it is accurate. That is the only line that counts. it is the major uptrend line and is the key in whether this stock is in a trending move higher or just consolidating or moving down. That line shows that the support lies at aprox. $8.50 to $9. ( you will have to pull up a more accurate daily chart for exact numbers) If you have a set of parallels you can draw a trend line along the tops or peaks which represents the overbought part of the channel and a quick look, does suggest the stock is currently in the overbought range. This move has transpired on good volume, so it should hold and I would think that it has alot of room to go. However, physical silver will have alot to do with that outcome and a short period of consolidation is not out of the question.
For the very short term trader types, there are 2 even sharper trend lines. One starts at the low in July at $7.50 area and moves to $10 to form a sharper shorter term trend. Then from $10, moving up almost vertical is the shortest term trend for crazy traders who fly by minute charts. That trend line ends at just under $12 and that would be the support for a change in trend short term basis. Once that line gives way, you sell. and buy back if it reaches the lower support lines which are $10 in a scale down method and later if the weakness continues, then at the lower support line.
One rule also applies to trading an item in a long term bullish trend. There is no guarrantee of buying cheaper. Sometimes shares do not weaken or touch their support points and thus you can be SOL also......
And lastly...TA is only a guide and can be interpretted incorrectly even by experienced people and get shut out of the market and left behind or get faked out and sit in a corrective phase that was not expected.
anyway...good luck to all...
So good luck to all ................