The month of August consistently proves to be a particularly important time in the gold and silver metals markets on a seasonal price basis. In 2013 I wrote several articles emphasizing this theme, suggesting would be buyers wait until summertime before becoming actionably bullish, if bullishness was their general bias outlook. Gold and silver metals prices have been basing this year after significant price declines last year from their lofty 2ND-half year 2011 and 2012 prices. Many gold and silver bulls are hoping this year's relative price action is setting the stage for a return to the trend of year-over-year price gains, and are looking positively towards this month again as what historically serves as the beginning of 2ND-half year seasonal price strength in gold and silver to support their aspirations for stronger prices going forward.
Additionally, this weekend marks the anniversary of the set of article's
I wrote on this subject last summer.
In the articles
, I focused on fundamentals supporting positive gold price action into the fall
, but I also warned about maintaining any long positions taken past fall and into years end, emphasizing instead the prudence of seasonal gold and silver swing trading. I also focused on an EchoVector Price Analysis Perspective in both gold and silver as well, reviewing them for the possible occurrences of annual price symmetries that might be forming, and these formation's potential trading implications forward into the rest of the year. This year the gold and silver metals markets are setting up once again for an important August month, and this coming week's price action appears in my focus as particularly significant once more. But let's first consider some current market fundamentals that may favor a potential for a seasonal gold and silver bounce, however potentially unexpected, yet once again this year.
FUNDAMENTALS SUPPORTING GOLD THIS WEEK
1. The timeliness of annual seasonality coming in for gold prices. August is often a key month for gold.
2. India, a major buyer of gold, appears to be have an ever-increasing appetite. The World Gold Council reports gold demand is likely to increase 20 percent by 2017.
3. US Stocks appear to many to be overbought after an historic 5-year bull run. Investors may look to gold as a haven from paper asset depreciation in the event of a market correct. Gold is still often considered a viable hedge by some analyst against a correction in stock prices (which some analysts are anticipating this August). Friday's gold market action in the wake of its strong stock market selloff continues to support this thesis.
4. Federal Reserve tapering is consistently underway and some think that relatively dovish Federal Reserve talk will give way to less dovish interest rate action down the road regarding interest rates, which may prove positive for gold.
5. Sentiment indicators among speculators in gold are hitting bearish extremes. Yet extreme bearish sentiment tends to be bullish.
6. Long positioning supporting articles by some analyst on the gold miners are appearing again in August 2014, suggesting that the NUGT and other related gold miners funds are possibly ready to move to the upside on a fundamental basis, which may indicate possibly improved production cost to expected metals price ratios and demand than achieved last year, and that the washout might be over.
TECHNICALS: A LOOK AT THE CHARTS
A current EchoVector Price Analysis Perspective of the GLD ETF GLD ETF reveals some very interesting recent price action as well. I've provided several charts below with echovector overlays to help highlight what this analysis currently suggests. They illustrate how the annual time cycle price momentum echovector this year has recently pivoted clockwise, from finally once again positive this year back again to a negative slope rate directional momentum (the longer solid white line compared to the longer solid red line on the first chart below -- that begins after the first).
However, in support of hopeful bulls, also note how this past Friday's "closing price annual cycle price momentum echovector (NYSE:AEV
)" has, however slightly, pivoting counter-clockwise back again from these otherwise bearish previous "clockwise pivots" in the annual cycle price momentum echovector slope rates. This can be seen in the next solid white annual echovector that follows the previous two mentioned reading along "time", from left to right.
A forecast scenario opportunity for short-term long positioning uplift in the first half of this coming week could become apparent. Friday's strong price action favored this. Although Friday was possibly a bull trap, note how the forward two weeks on an annual echovector basis indicate price strengthening looking at price action in their echo-back-weeks in 2013 on into August 2103's key third week options expiration week. Note also how the solid yellow bi-quarterly echovector (in solid yellow) also currently supports this thesis of forward cyclical strength as well.
The approaching week's echovector pivot point strength does not end with the annual and bi-quarterly echovectors either. EchoVector Pivot Point Strength in the bi-quarterly cycle echovector (2QEV), the annual cycle echovector , the 2-year congressional cycle echovector (CCEV), and the 4-year presidential cycle echovector (PCEV) all converge. This could be considered quite technically positive for the potential for price lift going forward into the Fall for those considering a long biased swing trade in gold and/or silver.
However, as strong as the key longer term cycle convergences are, cause for concern still exists technically. The shorter quarterly cycle echovector (QEV) provides little support to significant or enduring price lift and extension, and the monthly cycle echovector (MEV) actually countervails lift altogether. So stops would be particularly warranted among any venturing long side risk-on bullishness pursuers..
How the longer term time cycle echovector pivot point price projection strengths play out against the relative weakness in the shorter term cycle echovectors, particularly right after key monthly options expiration, will be very interesting in its impact on the formation of price momentum levels and subsequent price echovector weights and tracks for the second half of this year, and well into next year too.
GLD ETF: 1-YEAR DAILY OHLC
ANNUAL CYCLE ECHOVECTOR PIVOT POINT ANALYSIS FRAMECHART PERSPECTIVES AND HIGHLIGHTS
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GLD ETF 2-YEAR DAILY OHLC
CONGRESSIONAL CYCLE ECHOVECTOR PIVOT POINT ANALYSIS FRAMECHART PERSPECTIVE AND HIGHLIGHTS
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4-YEAR DAILY OHLC
PRESIDENTIAL CYCLE ECHOVECTOR PIVOT POINT ANALYSIS FRAMECHART PERSPECTIVES AND HIGHLIGHTS
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ADDITIONAL FRAMECHART FOOTNOTES AND OBSERVATIONS
1. On the GLD ETF ANNUAL CYCLE PRICE MOMENTUM ECHOVECTOR FRAMECHARTS: The longer solid yellow lines are bi-annual echovectors and the longer solid red, green, pink and blue-purple are annual echovectors. The shorter solid yellow lines are bi-quarterly echovectors. Notice the price updraft that follows next week well into August Options Expiration Week (3RD Trading Week of August) for both the annual echovector and the bi-quarterly echovectors.
2. On the GLD ETF 2-YEAR CONGRESSIONAL CYCLE PRICE MOMENTUM ECHOVECTOR FRAMECHART: The longer solid yellow echovectors are 2-year congressional cycle echovectors, and the solid red, green, pink and blue-purple lines that are half as long are annual echovectors . Notice that the price updraft that follows next week well into August Options Expiration Week (3RD Trading Week of August) for both the annual echovector and the bi-quarterly echovectors also occurs in the 2-year congressional cycle echovector. Also notice that both the key "end of May" 1-year pink annual cycle price momentum echovector and the key "end of May" 2-year yellow congressional cycle price momentum echovector are both parallel and overlap, their echobackdates are well in phase, and Friday's closing price annual cycle and congressional cycle echovectors are also well coordinated with them.
3. On the GLD ETF 4-YEAR PRESIDENTIAL CYCLE PRICE MOMENTUM ECHOVECTOR FRAMECHARTS: The very long solid green and solid white lines are 4-year price momentum echovectors (Presidential Cycle). This coming week's key green presidential cycle slope momentum price echovector and its support extension (dotted green), and its extension intersect with other key echovectors this month are of key interest.
4. On the GLD ETF 4-YEAR PRESIDENTIAL CYCLE PRICE MOMENTUM ECHOVECTOR FRAMECHARTS: Without sufficient price lift in the second half of this year, the 4-year presidential cycle price momentum echovector could pivot clockwise to negative, not the best prospect for gold or silver bulls.
ANALYSIS CONCLUSIONS AND FORWARD POSITIONING STRATEGY
At this key time, as we enter what is typically the beginning of seasonal price strength in gold, my suggestion is to remain nimble, and be ready to take advantage of cyclical echovector pivot point long opportunities as well as potential echovector pivot point short opportunities, while also remaining protected with stops. And, to the more advanced trader, I would suggest even being tactically ready, in the event of relative counter-cyclical occurrences, to have order protocols already constructed and inputted that would readily trigger position polarity reversals as market price action dictated.
One way to accomplish this would be to set up an active and adjustable OTAPS-PPS position polarity switch and straddle to manage your gold or silver metals market exposure to any potential changes in the price level momentum with regard to your targets and forward outlook. Setting straddles at momentum echovector switch level prices is an effective and opportune measure and advanced trade and position management strategy.
One way to employ such a straddle would be to utilize the GLD and/or related ETFs or Ultras. By setting up an advanced trade technology (see "On-Off-Through Vector Target Price Switch") at, for example, $124.50 on the GLD, with appropriate dynamic triggers and stops included, such a straddle can be employed.
To perform the short side of the straddle, set a short trigger below this example target price switch level ($124.50 on the GLD) pre-programmed as a "repeating short trigger switch" at the trigger level on reverse down-tick action through the trigger price, with stops set to activate on reverse uptick up-through action.
To perform the long side of the straddle, set a long trigger above the target price switch level ($124.50 on the GLD)) pre-programmed as a "repeating long trigger switch" at the trigger level on reverse uptick action through the trigger, with stops set to activate on reverse down-tick down-through action.
This coming week may be a very good time to employ this market straddle and this more advanced trade technology switch and active position management methodology, especially when reviewing the current echovector analysis framecharts of the gold metals market.
Thanks for reading. And Godspeed in your gold and silver metals market investing.
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Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in GLD over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The potential long position mentioned that may be taken is actually an active advanced management straddle switch.
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