Long-tarnished metals miners have been shining in 2016. Central bank shenanigans are weakening the US dollar and spurring precious metals prices. Over the short-term, silver may need a pause to refresh. But the overall character of the behavior of share price movement tells me silver is setting up for a nice long run.
In my Valentine’s Day missive to Options Hotline subscribers, I recommended readers get on-board a silver streamer via a call option on Silver Wheaton Corp. (SLW). This morning, I sent an Alert to take multiplier profits of +107% in just over a month, with an always known and strictly limited risk!
Let’s take a look at how that trade developed. As you can see on my weekly candlestick chart of SLW, February saw price break above the negative, debilitating influence of a downtrend line. That positive price action fortified underlying support (demand) and set the stage for higher prices down the road.
The extension higher over the past month has produced the development of a potentially negative technical divergence between price and the oscillating indicators. Divergence is the most important aspect of oscillator analysis. Looking at my daily candlestick chart of SLW, you can see price making new highs while the indicators are not. This tells us that the share price may not be as strong as it appears. Though there is time left on the option and it could go on to greater gains, with the price reaching toward our targeted resistance (supply), we’re happy to celebrate St. Patrick’s Day by applying Bernard Baruch’s adage, “No one ever lost money taking a profit.”
I can’t guarantee all my recommendations will reach multiplier status, but I do promise to continue to do my best each week to find option winners for my great subscribers.
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Good luck in your trading.