Sometimes resource stocks move on commodity price action, sometimes they move on company-specific developments and sometimes its both.
First Majestic Silver (FM.TO) gained 32.9% last week on a combination of factors. The Silver price has been soaring alongside Gold, attracting new interest to producers of either precious metal. Also, investors responded favorably to an earnings report and new resource estimates released by the company last week.
This combination of tailwinds enabled the stock to pop up from the red zone to the Green Favored Zone of the SIA S&P/TSX Composite Index Report and climb to its top rank in over three years. The shares finished on Friday in 13th position, up 90 spots last week and up 173 places over the last month. A major breakout is underway in First Majestic Silver (FR.TO) shares. Since February of 2021, FR.TO had been under distribution, as shown by the long-term downtrend of lower highs. In late 2023, downward momentum slowed and in the last month, the primary trend has reversed course.
Over the last few weeks, the chart has turned bullish with the shares rallying up off of $5.50, snapping out of a long-term downtrend, completing a bullish Falling Wedge pattern and breaking through key $9.00 and $10.00 now former resistance levels.
Based on the combination of a measured moves and previous highs, next potential upside resistance may emerge in the $12.50 to $13.00 area. Initial support moves up to the $10.00 round number from the $9.00 breakout point.
A new recovery trend appears to be getting underway in First Majestic Silver (FR.TO) shares. A long-term downtrend bottomed out in February. Since then, the shares have doubled off their bottom without even a three-box correction, a sign of renewed accumulation. Even with the short-term gain, a new uptrend appears to be just getting started with the shares completing a bullish and rare Spread Quintuple Top breakout and snapping a long-term 45-degree downtrend line that dated back to the previous peak in early 2021.
Initial upside resistance appears near $11.15, then $11.85 based on horizontal and vertical counts, followed by the November 2022 highs near $13.10. Initial support appears near the $10.00 round number, then $9.70 based on a 3-box reversal.
With a perfect SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 10 out of 10, FR.TO is exhibiting short-term strength across the asset classes.
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