Silver Wheaton (SLW) Ready For Comeback

Buying pressures continue to reign supreme on Wall Street as bullish euphoria has failed to evaporate – much to the bears’ frustration. Major equity indexes remain on a steep climb higher while the commodity market remains mixed at best; year-to-date, some commodities like corn and crude oil are clinching onto minor gains, while others like gold and silver remain in red territory [for more market news and analysis subscribe to our free newsletter].

With most equities either sitting at or headed towards new highs, many are hesitant to jump in after such a stellar run-up. Luckily, the investable universe is wide and not every security has enjoyed wild gains thus far in 2013. Silver-mining bellwether Silver Wheaton Corp. (SLW) presents an intriguing opportunity at the moment that warrants a closer look from contrarian investors looking to get a piece of the action on Wall Street.

Chart Analysis

Consider Silver Wheaton’s five-year daily chart below. The most important observation to make is the fact that this stock has been stuck in a fairly well-defined trading range for the majority of the last two years; notice how SLW has rebounded off the $30 level (blue line) and also failed to summit the $40 level (green line) on several occasions since the fourth quarter in 2010. While it’s true that SLW has traded as low as $25 a share in this same time frame, for the most part, this stock has been able to rebound higher upon flirting with support near the $30 level.

Click to Enlarge

Risk-tolerant traders may wish to take a long position at current levels for two reasons: first and foremost, traders can manage downside risk closely by setting a stop-loss right underneath SLW’s recent low or at $30 a share depending on risk preferences; second, traders can favorably position themselves in anticipation of a rebound, and SLW has some attractive upside potential seeing as how it’s trading near the bottom of its longer-term range [see 5 Commodity Trading Mistakes You Could Be Making].


Conservative investors may wish to stand back until SLW is above its 200-day moving average (yellow line) or $35 a share to avoid getting caught in a dead-cat bounce. From a technical perspective, this stock has immediate support along the $30 level, followed by $25 a share; in terms of upside, SLW has major resistance around $40 a share. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

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Disclosure: No positions at time of writing.

This entry was posted in Commodity Trading Outlook, Commodity Trading Trends, Silver, Trading and tagged . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

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