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ChartWatch: MAG Could Mount a Comeback

Andy Crowder

MAG Silver (AMEX: MVG) stock may be heading 30% higher soon.

The shares have fallen below $10 from a $13.42 high in November. ChartWatch readers may recall our previous coverage of this silver stock, along with expectations of a rise to $13 from our June report.

At the time, I was watching the $10 zone (blue line), which had been a strong spot of resistance. The signal to add the stock was on any advance that took the shares higher than $9.85.

QE3 hopes sparked a silver rally in August. In addition to QE3, silver’s best kept secret also played a major role in the ascent.

The rise in silver prices paved the way for silver miners – including MVG – to zoom higher. However, silver’s climb higher stalled in recent weeks, causing MVG to move lower.


http://stockcharts.com/c-sc/sc?s=MVG&p=D&yr=1&mn=8&dy=0&i=p96873050166&a=266199099&r=1354289733285

This chart shows the price of MVG shares along with an important support area to monitor.


The shares sank back to $10, which had been a resistance area in the past. Very often stocks will develop support near prior resistance zones. Accordingly, the $10 area should put a stop to the selling pressure in MVG and may provide a bounce to $11.

MVG may receive additional assistance from silver prices, too.

Silver appears ready to renew its ascent, especially since many traders may already be pricing in QE4. I expect silver stocks will rally if silver were to chug higher. Any move that takes silver beyond $38 should be enough to push MVG to $13. Whether or not you’re a believer in MVG, I would not be short this stock.

Equities mentioned in this article: MVG, Silver

Positions held in companies mentioned above: none

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