9-3-2009
As regular viewers of our videos know, we are constantly adding new video products. Guests on our videos now include:
- Jake Bernstein of Jake Bernstein's Weekly Market Letter on market trends
- Mark Leibovit of VR Trader.com on market timing
- And of course me, Ira Epstein
http://iraepstein.linngroup.com/videos.html?rand=0.021
I also now record mid-day webinars and holding live webinars at 12:30 PM CST on selective days. Customers are and will continue to be invited to attend. Each day’s webinar, whether live or recorded is posted on our website and can be accessed through your IraChart Software.
Seasonal Story
The charts below were supplied by The Moore Research Institute. In a break from what I’ve done in the past, this week I intend on leaving last week’s chart in place and adding where I think we now are.
Chart displayed in the August 27, 2009 Weekly Metal Report
Updated Seasonal Chart 9-3-2009
Either way, because of the gold’s large advance this week I believe that the “seasonal” move I’ve been preparing my customers for is both at hand and working. Keep in mind that while history does not predict the future, it is a tool that many market techinicans use when chart action confirms the seaonality of a move in prices in a specific direction.
Gold has historically displayed a tendency to rally beginning September 1st. The first phase of the overall seasonal typically lasts most of the month of September. That doesn’t mean prices have to or will rally all month. Rather I interpret it to mean that price strength on pullbacks is likely. It will be interesting to see how history plays out.
Monthly Gold Chart
Last week in this report I drew the above chart formation on the Monthly Chart and wrote; “The chart formation is called a “pennant”. Some call this a “triangle”. I call it getting reading to breakout, one way or the other…soon.”
OK…now the breakout has occurred. As I see it, prices would have to get back under 904.8 at this point in time to negate the Monthly Uptrend. I believe the first resistance price should be $1000 an ounce and after that 1014.6, the high made in March 2008.
Weekly Gold Chart
The Weekly Chart broke out at approximately the same time as the Monthly Chart did.
Last week’s letter pointed out that prices were compressing within the pennant fomation. In other words prices were trading within a narrowing chart formation that I felt favored an upside breakout since the seasonal study, market fundamentals and near term chart action seemed all poised for a price move up.
The graph on the bottom of the above chart shows SSTO (Slow Stochastics) in an overbought condition. Because of the time frame of this chart, the SSTO Study reacts and moves slower than that when the SSTO is displayed on a Daily Chart. If this is an uptrend that can carry up to the $1200 price level, an objective I have in mind, Stochastics will most likely first become even more overbought than they are now. If Stochastics transition from overbought to embedded, even higher prices should be seen at that time. This is all weeks away at a minimum. Therefore, right now seeing Stochastics overbought doesn’t mean a lot to me.
Daily Gold Chart
Since last week’s report, the price action has exploded.
Those of you that have access to my research know that I issued a futures market buy signal in my Twice Daily Market Report that was filled earlier this week and that I have been recommending hold Gold Call Option Spreads.
My game plan was to wait for the “Pennant Formation” to be broken, which in turn would take prices over the 18-Day Moving Average of Closes. On a pullback to the 18-Day Moving Average of Closes, the plan was to buy futures contracts. It all occurred.
Now we’re at the point where the “feeding frenzy” begins. Gold bugs will say that the next objective is the $1000-$1200 price level. Until proven wrong, I think they will be right, which means that on price pullbacks, I think additional long positions should be established.
Those following that letter should hold their Call Option Spread and the base position in their December Gold Futures.
Those not in should consider using price breaks to establish long positons. The key on price breaks will be risk now that prices have moved up sharply. As I believe there is more left to this move, I am looking to add to my recommended positions on price breaks.
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Disclaimer: This publication is strictly the opinion of its writer and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is taken from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures and Options on Futures trading involve risk. In no event should the content of this market letter be construed as an express or implied promise, guarantee or implication by or from The Ira Epstein Division of The Linn Group, Inc or The Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.
