A lively discussion in the chat room this morning underscored First Majestic’s popularity as a vehicle for trading and investing in silver. It has come down hard since peaking at 19.15 two weeks ago. Keep in mind, however, that some of the sellers would have bought the stock for as little as $2.40 in mid-January, and they are understandably eager to nail down gains that are still enormous. Under the circumstances, we shouldn’t be surprised to see them pounding AG pretty hard. It hit a low of $12.85 today, 3o% below the August 10 high, but looks like it could fall even farther before the drubbing ends.
This became apparent early in the session when AG crushed a 13.94 Hidden Pivot support that had held for two days. On Monday, Majestic bounced sharply from within two cents of that target; but the rally died on Tuesday’s opening bar at 14.99, and the subsequent relapse has been punitive. The ‘secondary’ Hidden Pivot support at 12.85 saved the day, providing a precise but so-far weak bounce. If it gives way on Thursday as I expect, however, look for the stock to fall to at least 12.14. You could buy aggressively there with a stop-loss as tight as a nickel, but don’t let your guard down if the trade should go our way initially. _______ UPDATE (August 30, 11:39 p.m. EDT): The stock has fallen by a dollar, or nearly 8 percent, since I first aired the 12.14 correction target a week ago. If you made money by being short, more power to you for exploiting the target aggressively. As regards bottom-fishing, however, the turn came from two cent above where I’d suggested placing a bid, so we hold no position officially. If you bought anyway and used the very tight stop-loss I’d suggested, the so-far 27-cent rally off the low would be reason to have taken a partial profit. Do not attempt this trade if there’s a second chance, but if you hold a position, use a stop-loss that would preserve at least a portion of your gain if AG should relapse.______ UPDATE (September 1, 12:25 a.m.): We hold no position officially, but if you’re long nonetheless please be aware that there’s short-term jeopardy to at least 11.24. That’s the secondary Hidden Pivot support of this pattern on the 60-minute chart: A=16.77 (8/18): B=12.95 (8/24); and C=14.18._______ UPDATE (11:26 p.m.): Today’s shelling caused AG to fall to 11.09, fully 15 cents below the secondary pivot at 11.24 given above. This implies that the pattern’s 10.26 target is now an odds-on bet to be reached. First, though, expect the dirtballs who have been slamming the stock — it has fallen 42% since topping just three weeks ago — to run it up for a few days so they can distribute it ahead of the engineered washout to $10.