Silver Standard's Recent Rally Warrants Another Look

 | Jul 07, 2016 | 11:20 AM EDT
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We started highlighting the bullish potential of silver miners on Sept. 21 last year and updated our views on Silver Standard Resources (SSRI) on Oct. 5. With SSRI soaring to $14 and change, we thought another update was in order. 

In this daily chart of SSRI, above, we can see how SSRI retreated with the general market weakness in November, December and into January. SSRI touched $4 before a move up that was more than a triple from the low, and a double from our first recommendation. What is interesting to me is that the On-Balance-Volume (OBV) line was steady even during the late 2015 decline. This suggests that longs held their positions. In April, the OBV turns upward, showing very strong buying and accumulation. The momentum study has moved up with the price action, and does not show a bearish divergence at this point.  

In this weekly chart of SSRI, above, we want to point out that SSRI has broken above the highs of 2014. This gives us a big 3-1/2-year base pattern that can support further long-term gains. Prices of SSRI are above the rising 40-week moving average line, and the weekly OBV line is pointed up. There are no bearish divergences from the 12-week momentum study. There is some resistance above the market from the highs of 2012, but it may not be significant because over the intervening years those longs could have sold.

Strategy -- precious metals are still relatively unloved and under-owned, in my opinion, so the long-term remains bullish. In the short run, prices are pretty extended on the upside, and it would not be unexpected to see prices trade sideways for the balance of the month. 

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