Tuesday, September 21, 2010

Silver Weaton Corp----Time to Short!

Silver Weaton (SLW) purchases and mines for silver and other precious metals.  Silver Weaton has had a nice run, over 67% YTD gains.  They have reported record quarters and management has certainly been doing a great job.  I like Silver Weaton as a stock and a company...just not at the moment.

SLW is wayyy overbought and should be giving back gains in the very near future.  If you examine the technicals, this stock is ripe for a fall....which it did today but regained with the Fed's announcement.  This is a huge opportunity to purchase SLW Oct 26 Puts

Here is why SLW is overvalued:

  • RSI is at 71.66--overbought territory
  • MACD is at a ridiculous 1.186--huge signal of overbought status
  • Williams%R is at -12.65---again way overbought
  • Slow Stochastics is at 85.39--overbought
  • Lots of recent buying activity
**If you do not understand what these indicators are please go to investopedia.com and look them up or wait until I make a post within the next few days of my most important technical indicators and how they are used.

As you can see, SLW is wayy overvalued and will be headed lower.  I recommend buying SLW Oct 26 Puts.  These will provide you with some very nice gains within the next few weeks when Silver Weaton takes a fall.




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3 comments:

  1. I like it. I'll see how it goes. WHat do you think of NFLX up here.

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  2. Tripp: NFLX as a company (fundamentals) it is a great company. However, the technicals point to an overbought situation that is almost as bad as SLW. I would wait for a pull back on NFLX before I buy.

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  3. Is this M F'er ever gonna come down, I mean I'm in at .87 I'll probably never make it back.

    ReplyDelete