Todays Big Stock: Silvercorp Metals Inc Ordinary (SVM)

Silvercorp Metals, Inc. is engaged in the acquisition, exploration, development and mining of high-grade silver-related mineral properties in China and Canada. Silvercorp is the primary silver producer in China through the operation of the four silver-lead-zinc mines at the Ying Mining Camp in the Henan Province of China. Silvercorp is building the GC silver-lead-zinc project in Guangdong Province as its China production base, which will be followed by the third production base at the BYP gold-lead-zinc project in Hunan Province. During fiscal year ended March 31, 2011, the company mined 592,330 tons of ore. In fiscal 2011, 596,735 tons of ore was milled. During fiscal 2011, metals production were 5.3 million ounces of silver, 3,200 ounces of gold, 69 million pounds of lead and 16.3 million pounds of zinc.

Please take a look at the 1-year chart of SVM (Silvercorp Metals, Inc.) below with my added notations:

Currently, SVM has a lower level of support at $6 (green), which has been tested several times in September and December.  Since June, the level of $8 has acted as both support (navy) and resistance (red). The stock currently sits around $7 and has not taken part in the overall stock market’s recent rally. When the market finally pulls back, SVM should make a break back down to $6, and possibly lower.

 

The Tale of the Tape: SVM has important levels at both $6 and $8. Long trades could be made on a break up through $8 or on a pullback to $6. Shorting the stock would be recommended on a break below $6.

 

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT