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A Look at Silver Miners after Their 4Q16 Earnings Announcements

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Part 14
A Look at Silver Miners after Their 4Q16 Earnings Announcements PART 14 OF 16

Are Silver Miners Oversold?

Moving averages

Traders and investors also look at moving averages while making market entry or exit decisions. Usually, if a stock is trading below its 20-day or 50-day moving average, it’s an indication that the stock is oversold. Similarly, if a stock is trading much higher than its 20-day or 50-day moving average, it indicates that it’s overbought. In this part of our series, we’ll look at silver miners’ technical trends.

Are Silver Miners Oversold?

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Silver miners’ moving averages

The table above shows the moving averages, forward target prices, and returns of five silver miners. All silver miners are currently trading below their respective 50-day moving averages and 20-day moving averages. Coeur Mining (CDE), Hecla Mining (HL), and First Majestic Silver (AG) are trading 17.6%, 13.3%, and 12.3%, respectively, below their 50-day moving averages.

Relative strength index

As an RSI (relative strength index) score approaches 70, it means that an asset may become overvalued and is a good candidate for a fall in prices. Likewise, if an RSI score approaches 30, it’s an indication that an asset may be oversold and will likely become undervalued.

Based on closing prices on March 23, 2017, some silver miners are trading close to their oversold positions. Tahoe Resources (TAHO), Hecla Mining, and First Majestic Silver had 14-day RSI scores of 34.9, 44.4, and 44.8, respectively.

Although technical indicators mean there could be a short-term bounce back, investors should note that markets can remain overbought or oversold for extended periods. The iShares Silver Trust ETF (SLV) is also oversold. SLV is trading 3.4% below its 50-day moving average and at an RSI score of 41.9. Now that we’ve looked at the technical parameters for silver miners, we’ll look at analysts’ views on them in the next part of this series.

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