Saturday, February 19, 2011
Trade Update: SVM
SVM is one of the stocks that we have been in and out of for some time now. Our first foray into the miner was at $6.47 and we rode it to $11.36. It looked overextended there, so we sold, but it didn't sell off, rather it found support there. So, we reentered at $12.22 with a stop at $11.20. You can see on the chart that it closed on this week at $13.06.
You can also see from the chart that the $13.50 zone provides formittible prior resistance and that SVM is approaching this level with the stochastics pegged at 90%. This normally indicated that momentum is spent, but remember that in a run the data tends to skew the indicator in the direction of the run. So, the overbought condition can persist for a long time. In this case I think it just might. Silver SLV blasted through resistance of $31 continued physical shortages will likely leave silver in a state of backwardation for some time. This occurs when the current or spot price for silver is greater than the futures price.This is bullish to say the least and will certainly damp the effects of any pullback.
So, for now I like where we are in SVM, up about fifty cents with a stop at $11.20