Two silver stocks that look ready to rally

Between 1 October 2012 and 1 March 2013 the price of silver fell by 18.9%, while over the same period many of the silver miners fell by considerably more. Now however, several of these stocks (two in particular), have begun to show signs of strength and look ready to rally.

The first of these is Silver Corp., a low-cost Canadian based producer with multiple mines in China. The company will continue to focus in China and plans to grow its high quality development projects through future consolidation, exploration, mine development and acquisition. It has over $140 million in cash and short term investments, and no debt.

As the chart below shows, the stock has recently broken above overhead resistance (blue line) and the price action looks bullish.

A 6 month daily chart of Silver Corp. Metals, Inc. (NYSE:SVM) (Click on the chart for a larger version)

A 6 month daily chart of Silver Corp. Metals, Inc. (NYSE:SVM) (Click on the chart for a larger version)

Chart courtesy of stockcharts.com

Silver Corp’s advance was preceded by positive divergence on the RSI (relative strength index), and was accompanied by a decent expansion in trading volume. The next hurdle for the stock is the 50-day moving average (red line).

The second silver company that is showing signs of a recovery is Endeavour Silver. Endeavour is a premier, mid-tier silver miner with three producing silver mines in Mexico.  The company has posted eight consecutive years of growing silver production, reserves and resources, and this remains the focus of the company. In addition to its three producing mines the company has an attractive portfolio of exploration properties.

As the chart below shows, Endeavour has also broken out above previous resistance and looks to be ready to rally. Again the breakout was preceded by positive divergence on the RSI, and an expansion in volume.

A 6 month daily chart of Endeavour Silver Corp. (NYSE:EXK) (Click on the chart for a larger version)

A 6 month daily chart of Endeavour Silver Corp. (NYSE:EXK) (Click on the chart for a larger version)

Chart courtesy of stockcharts.com

Endeavour is now consolidating above its 20-day moving average which should provide support. As with Silver Corp. the next target for the stock is the 50-day moving average (red line).

Other silver stocks to watch

Other silver stocks that are also exhibiting bullish price action which could be indicative of a bottom, include, Rubicon Minerals (NYSEAMEX:RBY) and McEwen Mining (NYSE:MUX).

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