Earlier in the series, we analyzed Coeur Mining’s (CDE) business fundamentals and analyst expectations. We saw that the company’s operating environment has improved due to higher gold (GLD) and silver (SLV) prices in 2016, which have again started showing signs of weakness.
In this part of the series, we’ll see what the technical indicators point to for Coeur Mining and its peers.
Oversold or overbought?
Traders and investors look at moving averages when deciding whether to enter or exit the market. Usually, if a stock is trading below its 20-day or 50-day moving averages, 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 averages, it indicates an overbought position. Coeur Mining and its closest peers are currently trading below their 20-day and 50-day moving averages.
Coeur is trading 18.4% below its 50-day moving average and 1.7% below its 20-day moving average. Pan American Silver (PAAS), First Majestic Silver (AG), and Tahoe Resources (TAHO) are trading 6.3%, 12.5%, and 12.5%, respectively, below their 50-day moving averages.
The above table shows the moving averages, forward target prices, and returns of the four major silver and gold producers.
Relative strength index
As an RSI (relative strength index) level approaches 70, assets may be overvalued, and we could see a fall in prices. If an RSI level approaches 30, it shows that an asset may be oversold and could become undervalued.
Based on its March 21, 2017, closing price, Coeur Mining is trading at an RSI of 40.6. Based on technical indicators, there might be an upside to Coeur as well as its peers. Although technical indicators mean Coeur could bounce back in the short term, it’s worth noting that the markets could remain overbought or oversold for extended periods.
The iShares Silver Trust (SLV), which tracks silver prices, is trading 0.20% below its 50-day moving average.
In the next and concluding part of this series, we’ll take a look at Coeur Mining’s valuation and what it implies in relation to its historical average and peer average.