The metal as represented by the iShares Silver Trust (NYSE:SLV) ETF just cleared an important resistance level near $37.50. SLV had been confined to a tight range since the spectacular drop in May, and by clearing the $37.50 level, SLV may have put in an intermediate bottom. The $32.50 level has held on a few occasions, and now that SLV has set a higher pivot high, it can set its sights on the all-time high near $48. Traders should keep a close eye on the $37.50 area, as it should now act as a support level. Any close below this level would certainly merit caution.
Endeavor Silver Corporation (AMEX:EXK) is a silver miner that has been quietlyconsolidating after a strong rally earlier this year. It recently cleared some resistance along with the metal in July, as it closed above first its 50-day moving average, and then a pivot high near $10.40. EXK remains in a larger consolidation and has been forming anascending triangle pattern, with trendline resistance near $11. Any close above this level would be bullish, and may lead to new highs.
Great Panther Silver Limited (AMEX:GPL) has been trading in almost exactly the same pattern as EXK. It first cleared some resistance levels in late June and early July and after a shallow pullback, could be poised to break out of the triangle pattern it has been building. GPL found support near its 50-day moving average and a close above $4 could signal a breakout.
First Majestic Silver Corp. (NYSE:AG) is also close to breaking out of its consolidation pattern, although the base is flatter and closer to a rectangle than an ascending triangle. In the end, either pattern is simply a consolidation pattern and the underlying psychology behind them are the same. The $26 level would be the area to watch as a close above this level would put $AG in position to run to all-time highs. (For more, see Triangles: A Short Study In Continuation Patterns)
The Bottom Line
It’s usually a good sign when an entire group moves in unison, as it usually has institutional money behind it. The silver miners are all basically shadowing the precious metal and with silver recently clearing some resistance, it could be setting the stage for a miner rally. This, coupled with the fact that the miners have held up better than most other sectors could be pointing to higher prices for the group. Traders should monitor how these stocks react to the top of their current bases, but any breakout above resistance could lead to a fast move higher.