Silver finally began a correction in late April after a parabolic spike through most of the beginning of the year. The correction was brutal over the first few days in May, but silver basically found some footing and started trading in a tight sideways range. In looking at the iShares Silver Trust (NYSE:SLV) ETF, one can see that the $32.50 level held on the initial down thrust and appears to have held as support on the latest test in late June. Volume has dwindled back to normal levels after a huge spike during the correction. While it is too early to know whether SLV is done correcting, it does appear ready for an attempt at a bounce. The first level to watch would be near $37.50 which has held as resistance on a few attempts. SLV looks like it is headed for a at least a test of this level. (For a related primer, see A Beginner's Guide To Precious Metals.)

Silver Wheaton Corp. (NYSE:SLW) is a silver miner that just survived its own test of support near the $30 level. SLW has been one of this group's leaders over the past few years. It understandably corrected along with the base metal after hitting new all-time highs earlier this year. SLW recently cleared a wedge it was following on the way down and is currently testing its 50- and 200-day moving average near $35. A successful break of this level could lead to a potential bottom being put in for SLW. (For more on trading silver, see Trading Gold And Silver Futures Contracts.)

Endeavour Silver Corporation (AMEX:EXK) is another silver miner that is attempting to find a floor. EXK came back to test the $7.50 level, which it had cleared earlier this year on its way to all-time highs near $13. While the correction has been steep in percentage terms, the structure has remained typical of a stock in an uptrend. The one thing to keep an eye on has been the increased volume throughout the base. This is typically a warning sign and traders will need to keep an eye on volume during any negative days.

Great Panther Silver Limited (AMEX:GPL) is another silver miner that could be ready for a rally attempt. GPL also had above-average volume during its recent consolidation, and did dip under a support level near $3. However, it rebounded off its 200-day moving average recently and is in the process of attempting to clear a trendline, marking the top of the channel it has been drifting lower in. It is also back above its 20 and 50-day moving averages and could be ready for an attempted breakout.

The Bottom Line
While Silver still has a lot of work ahead, the miners appear to be showing some relative strength to the metal. Neither can be safely assumed to have bottomed, but there are signs that an intermediate low may be in. Traders should closely monitor the recent lows as a line in the sand, and more importantly, watch to see how the miners deal with any selling pressure in the coming days. If selling pressure is light, the miners could attempt a move towards their recent highs. (For an intro to using relative strength effectively, see Momentum and the Relative Strength Index.)

Charts courtesy of

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  2. Chart Advisor

    ChartAdvisor for November 27 2015

    Weekly technical summary of the major U.S. indexes.
  3. Chart Advisor

    Pay Attention To These Stock Patterns Playing Out

    The stocks are all moving different types of patterns. A breakout could signal a major price move in the trending direction, or it could reverse the trend.
  4. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  5. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  6. Technical Indicators

    Using Pivot Points For Predictions

    Learn one of the most common methods of finding support and resistance levels.
  7. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  8. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  9. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  10. Chart Advisor

    Watch These Stocks for Breakouts

    These four stocks are moving within price patterns of various size, shape and duration, and are worth watching for a breakout
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center