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« Minco Silver Corporation Up 40% Today | Main | Silver—Too Little or Too Much? »
Monday
May042009

Silver Wheaton (SLW): Triangle Breakout?

Silver Wheaton (SLW): Triangle Breakout?


SLW appears to have formed a symmetrical triangle formation over the past couple of months, with the base forming in mid March at around $6.00. Since then Silver Wheaton has rallied to $8.75, before being dragged down to $7.25 in the last month or so. However in today’s trading SLW surged 7.12%, which could be the beginnings of a bullish breakout for this silver stock.

As well as pushing SLW up through the technical barrier of the triangle formation, today’s jump also prompted a positive crossover in the MACD indicator, shown on the above chart by the black line crossing up through the red line. This is usually a bullish sign, however we must consider the other technical indicators to get a better idea of the whole picture.

Although we can also see a positive crossover on the Full STO, this indicator is in the middle of its range and therefore since it is not drastically oversold, this doesn’t give us a strong buy signal. Likewise the RSI is simply moving sideways in its mid range, currently at 57.66. We prefer this indicator to be at 30 or below before buying.

Looking to the fundamentals, although silver prices also had a great day rising 52 cents or just over 4%, we are not overly bullish on silver in the short term, or on gold for that matter, based on their technical pictures. In addition to this we have just entered a seasonally weak time for stocks and precious metals alike, so we are not purchasing any gold or silver stocks at present.

Therefore after taking all of the above into account, although this may be a good technical breakout for Silver Wheaton, there are other factors that we must consider and they do not support a rally in this stock in the short term, and so we have decided to sit this one out and not place any trades on SLW.

But the next opportunity could be coming soon, so we are keeping a close watch for entry points to add to our long-term holdings and trading possibilities.


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