Long First Majestic #tradingtheapocalypse
Updated
Fundamentals
First Majestic is a primary silver producer (which moves more like a junior). It has historically been heavily shorted, making it a good candidate for outperforming in any precious metals bull market. Arguably, we are in the beginning stages of a precious metals bull market, kicked off by the slowing of Fed rate rises in August 2022. First Majestic sold off heavily on news that they had suspended production at Jerrit Canyon. In fact, this news, while disappointing in the short term, is bullish in the medium term, since it returns the company to be mainly weighted silver, which outperforms gold. It's also bullish in the long term, as once management has made the necessary changes, Jerrit Canyon can come back online and produce gold at a reasonable AISC. AG is trading near its Covid lows, which seems to be to be deeply oversold from a fundamental point of view.
The underlying macro thesis is that there will be a flight to precious metals due to weakness in the banking sector, historical price manipulation coming to an end, central bank buying of gold, and many other reasons. #tradingtheapocalypse
Technicals
Weekly RSI in July 2022 was around as oversold as the Covid lows. Compared to then, weekly RSI has made a regular bullish divergence, signalling a likely end to the high-timeframe downtrend.
Daily RSI already made regular bullish divergence on the low before the JC news, and has made even more pronounced bullish divergence since. Price recently reclaimed weekly resistance.
This position is a long-term (weeks/months) long trade, entering now, with a stop under the recent low and a final take-profit at the 2021 high. There are many dynamic and horizontal resistances between here and there where one could swing a portion of the trade.
First Majestic is a primary silver producer (which moves more like a junior). It has historically been heavily shorted, making it a good candidate for outperforming in any precious metals bull market. Arguably, we are in the beginning stages of a precious metals bull market, kicked off by the slowing of Fed rate rises in August 2022. First Majestic sold off heavily on news that they had suspended production at Jerrit Canyon. In fact, this news, while disappointing in the short term, is bullish in the medium term, since it returns the company to be mainly weighted silver, which outperforms gold. It's also bullish in the long term, as once management has made the necessary changes, Jerrit Canyon can come back online and produce gold at a reasonable AISC. AG is trading near its Covid lows, which seems to be to be deeply oversold from a fundamental point of view.
The underlying macro thesis is that there will be a flight to precious metals due to weakness in the banking sector, historical price manipulation coming to an end, central bank buying of gold, and many other reasons. #tradingtheapocalypse
Technicals
Weekly RSI in July 2022 was around as oversold as the Covid lows. Compared to then, weekly RSI has made a regular bullish divergence, signalling a likely end to the high-timeframe downtrend.
Daily RSI already made regular bullish divergence on the low before the JC news, and has made even more pronounced bullish divergence since. Price recently reclaimed weekly resistance.
This position is a long-term (weeks/months) long trade, entering now, with a stop under the recent low and a final take-profit at the 2021 high. There are many dynamic and horizontal resistances between here and there where one could swing a portion of the trade.
Note
Stopped out. Looks like making another VERY divergent Lower Low, which will be the next long-term entry.Trade active
Re-entering.After our first entry we got a higher High but then a long decline, eventually stopping us out.
Fundamental case is still the same.
Technically, AG recently made daily bullish RSI divergence from extreme oversold levels, followed by a number of higher Lows in both price and RSI, showing orderly momentum. The picture for the underlying asset, Silver, is similar, Silver having made a base out of its 200-day moving average and then a significant pop up above all dynamic resistances today. It's probably due to CPI coming in below expectations, or something else to do with the Fed. Regardless, I'm trading the chart.
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