In a pod-cast on November 23, Equity Management Academy CEO Patrick MontesDeOca called a bottom in the gold and silver markets, recommending buying for the long term.
In a November 18 Academy report, MontesDeOca discussed how gold had closed at $1211, below the 9-day moving average of $1275 for short-term day trading.
“The gold futures contract closed at 1211. The market closing below the 9 SMA 1275 is confirmation that the weekly trend momentum is bearish. A close above the 9 SMA would negate the weekly bearish short-term trend to neutral.”
“This indicates that the trend, the momentum is bearish,” he said, “although it also prepares us for the other side of the coin. If the market closes above $1275, that it would negate this bearish sentiment and turn the trend momentum neutral.”
MontesDeOca bases his analysis in part on the weekly price momentum indicator or pivot point, which is basically the average or the mean of the price. He uses the indicator to identify up and down trends. For gold, he said, a price below $1217 is bearish, which would automatically provide targets for buy 1 and buy 2 of $1198 to $1185.
“Look to take profits on shorts into corrections at the Buy 1 and 2 levels of 1198 – 1185, and go long on a weekly reversal stop. If long, use the 1185 level as a Stop Close Only and Good Till Cancelled order.”
“Coming into this week,” Montes De Oca said, “we see a bit of a bearish sentiment, with gold closing below $1217 and activating the levels of $1198 to $1185, which is where we are currently trading.” Gold is at $1190 last with a low of $1181.2.
“We are right into what I call the harmonics or the demand level in gold,” he said, “which is basically a very high probability according to our algorithm that the prices will revert back to the mean of $1217 as the initial target. If gold closes above $1198, it will activate the $1217 target.” MontesDeOca believes that the market is “Telling us right now that it is in a very, very strong major level of demand.”
For day trading, the price is below the buy 2 level, or at an extreme below the mean, at $1187, which means it is extremely oversold. Therefore, he said, it is “likely the price will revert to the mean of $1212, which is the daily average mean or pivot point.” He forecast that gold will gravitate to the $1217 target, the weekly mean, and if gold closes above $1217, we are looking at $1230 to $1239 as the next targets.
Turning to the silver market, it closed on the 18th at $16.72, below the 9-day moving average of $18.06. MontesDeOca said, “The trend momentum is bearish, but a close above $18.06 will negate this bearishness.”
The silver futures contract closed at 16.72. The market closing below the 9 SMA 18.06, is confirmation that the weekly trend momentum is bearish. A close above the 9 SMA would negate the weekly bearish short-term trend to neutral.
If silver closes below $16.94, it would be a bearish sign. If it closes above $1694, it would negate this bearishness. MontesDeOca recommended “Taking profits on bearish positions at the $16.30 to $15.89 level, using $1589 as your stop.”
“Look to take profits on shorts into corrections at the Buy 1 and 2 levels of 16.30 – 15.89, and go long on a weekly reversal stop. If long, use the 15.89 level as a Stop Close Only and Good Till Cancelled order.”
With silver trading at $16.24 and a low of $16.17, MontesDeOca said, “We are stabbing right into the demand level on the weekly basis of $16.30 to $15.89. We have what I call a perfect convergence on the harmonics on the daily, weekly and monthly signals.” It is, he said, “A perfect alignment and the completion of this alignment took place today in gold and silver.” They have aligned themselves to these levels, “indicating a very high probability that we’ll see demand develop from these levels and prices will revert back to the mean of $16.94 for silver.” He said, “Closing above $16.94 validates and completes this bottoming process that is taking place for the gold and silver markets.”
The goal of the Equity Management Academy is to provide a select group of investors with the tools and information to invest wisely and well for the long-term in these tough economic times. For more information about the Academy and Patrick MontesDeOca, please email email@example.com or call 805-418-1744.