Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Silver: Technicals Suggest Very Bullish Long-Term Outlook

By

It's clear from the charts that silver and silver stocks are in position for a potentially spectacular move over the next three to five years.

PrintPRINT
While my firm has written about silver here and there, we have not covered it publicly in over a year. The market made an obvious cyclical top last spring and the tremendous gains from late 2008 into 2011 would need to be corrected and digested. From May to July the market tested its lows successfully and formed support. The recent advance confirmed the lows and confirms that we are likely in a new cyclical bull market. Based on the technicals, silver and silver stocks continue to show tremendous long-term potential.

Below is a chart of our growth producer index which features 10 growth-oriented producers and is weighted somewhat by market capitalization. The market had a rip-roaring advance which lasted a total of 27 months. The correction lasted about 14 months (a 50% time retracement) and retraced about 50% in price. As you can see from the circles, the low occurred in May and was retested multiple times over the summer.



The long-term technical outlook for silver producers is potentially nothing short of super bullish. We say potentially because nothing is certain in this business. The market has formed a textbook cup and handle pattern. Note that the beginning of the handle is higher than the start of the cup. In other words, this shows more strength than a typical pattern in which those two points are equal or in which the start of the handle is lower than the start of the cup.



Moreover, we can visually see that the correction in a long-term sense was relatively mild. Mathematically speaking it was dramatic (about 50% in percentage terms) but much less dramatic than 2007-2008 (90%) and less dramatic than 2004 (60%). A smaller correction can be a sign of a market building internal strength for the next impulsive advance.
< Previous
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE