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Przemyslaw Radomski, CFA
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Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same. His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the... More
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  • Sunshine Profits: Silver And Mining Stocks – Resistance Has Been Reached 0 comments
    Oct 30, 2013 1:11 PM | about stocks: GLD, SLV, GDX, UUP, UDN, SPY, DIA, DGP, DZZ, DGZ, UBG, UBM, USV, PTM, PTD, JJM, JJN, IAU, GDXJ

    Silver and Mining Stocks - Resistance Has Been Reached

    In our previous commentary we discussed the implications that the most recent moves in the USD Index and the general stock market are likely to have on the precious metals market. Today, we will briefly discuss two parts of the PM market: silver and mining stocks (precisely: SLV and GDX ETFs). We summarized the previous essay in the following way:

    (...) the impact that the USD Index and the general stock markets are likely to have on the precious metals market is weak and bullish on a short-term basis, but more meaningful and bearish in the medium term.

    Since that essay was posted, we saw have seen a small move higher, which was in perfect tune with the above. Now, however, it seems that it is the medium-term decline that we should focus on as the resistance levels have already been reached in case of silver and mining stocks. That was's the case with gold as well.

    Let's take a look at the SLV ETF chart (charts courtesy of stockcharts.com.)

    (click to enlarge)

    Looking at the above chart we see that the SLV ETF moved above the 50-day moving average and reached the medium-term declining resistance line (based on daily closing prices - February and August highs) in the previous week.

    Although silver closed the week slightly above its 50-day moving average, which is a bullish sign, we didn't see a breakout above the medium-term declining resistance line in the following days. On top of that, we saw a move lower after silver reached it.

    From this point of view, it seems that further increases will likely be limited, especially when we take into account the fact that silver's cyclical turning point is just around the corner. Therefore, it's quite possible that we will see its impact on silver in the coming days. This can lead to a pause or even stop further increases.

    Can we see a confirmation of the above in the chart featuring mining stocks? Let's have a look at the whole senior mining stocks sector with Market Vectors Gold Miners ETF as a proxy.

    (click to enlarge)

    On a short-term basis, we have seen strong performance since mid-October. Additionally, in the previous week the GDX ETF broke above the declining resistance line and continued its rally in the following days. In this way, yesterday, it reached a resistance line - the neck level of the previously completed head and shoulders pattern. The 50-day moving average was not successfully broken and the temporary move above the 38.2% Fibonacci retracement level was invalidated. The latter provides us with bearish implications for the short term. In other words, it looks like the rally that was likely to happen, is already behind us or quite close to being over (we wouldn't rule out another move to the „neck" level, but we don't think that we will see a confirmed breakout above it).

    Summing up, although we've saw seen an upward move in silver in the recent days, it didn't hasn't changed much from the medium-term perspective. When we factor in the impact of the USD Index and the general stock market that we discussed in the previous essay, silver's cyclical turning point, which is just around the corner, and the fact that the short-term resistance lines were have already been reached in case of the GDX ETF, we can presume that the top of the recent upward move in the precious metals may be already in (or is very close to being in). In fact, we have suggested closing speculative long positions in yesterday's Market Alert.

    To make sure that you are notified once the new features are implemented, and get immediate access to our free thoughts on the market, including information not available publicly, we urge you to sign up for our free gold investment newsletter. Sign up today and you'll also get free, 7-day access to the Premium Sections on our website, including valuable tools and charts dedicated to serious Precious Metals Investors and Traders along with our 14 best gold investment practices. It's free and you may unsubscribe at any time.

    Thank you for reading. Have a great and profitable week!

    Przemyslaw Radomski, CFA

    Founder, Editor-in-chief

    Gold Trading and Gold Investment Website - SunshineProfits.com

    * * * * *

    About Sunshine Profits

    Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

    Disclaimer

    All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

    Stocks: GLD, SLV, GDX, UUP, UDN, SPY, DIA, DGP, DZZ, DGZ, UBG, UBM, USV, PTM, PTD, JJM, JJN, IAU, GDXJ
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