Author Archives: pmontesdeoca

Beware And Prepare, Gold And Silver Have Arrived!

 

 

Summary

Gold met the sell 1 target I set in our November 14 report of $1,281.

Our algorithm indicates that since gold closed above the weekly trend average price of $1,284, the gold market has turned bullish for the upcoming week.

If the market closes above $1,317, we are looking at a new price fractal, which is anticipating a rally in the gold market up to $1,326 next week.

inSilver, the VC PMI, tells us that, based on the weekly price indicator being bullish, to take profits on long positions at the sell 1 level of $17.57 and the sell 2 levels at $17.78.

I would like to review the report we published in Seeking Alpha on November 14, 2017.

Read more click HERE

The VC PMI “Variable Changing Price Momentum Indicator” with Patrick MontesDeOca

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The VC PMI “Variable Changing Price Momentum Indicator” with Patrick MontesDeOca

Join us on December 4, at 4:30 pm EST, as Patrick MontesDeOca,
CEO of EMA2TradeLiveSignals.com, offers an overview of the VC PMI. The Variable Changing Price Momentum Indicator. This intelligent algorithmic trading 
system deploys a range of analytical tools to analyze and day trade five futures contracts: gold, silver, soybeans, E-Mini S&P 500, crude oil, gold mining shares and 3x velocity ETF’s like JNUG, USLV and SPY. The system is completely automated, comprehensive and highly predictive. 
After more than 30 years in the financial market business, MontesDeOca has developed a unique and automated trading tool based on a combination of Elliott Wave, Fibonacci, WD Gann and Vedic Mathematics. This proprietary trading tool, the VC Price Momentum Indicator, is a revolutionary trading tool that identifies major cyclical changes and trading opportunities in the commodities and financial markets with unprecedented accuracy.

MontesDeOca, has spent more than three decades trading all types of markets, beginning in 1974 as a legal, banking and trading advisor for several major Latin American coffee exporters. During the 1980s he became a member of the New York Coffee and Sugar Exchange, and the New York Mercantile. He also served as a consultant and technical analyst for the Mexican government. He created the MCTS Markets Commentary, an advanced automated and technically oriented market letter for the financial and commodity markets published daily in Consensus Magazine since 2003. He is a widely published author, technical analyst and commentator in SeekingAlpha.com, INVESTING.COM, and TraderPlanet.com.The complex multifaceted system is now completely automated and is available from TradeStation Technologies app store. Register Now


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Will Silver Make New 2017 Lows?


Summary

Our proprietary Variable Changing Price Momentum Indicator (VC PMI) weekly gold analysis forecasts that gold will move the extreme above the mean into the $1281 to $1292 range short term.

The monthly VC PMI gold analysis shows that gold is likely to move into the $1298 to $1326 extreme above the mean in November.

The VC PMI silver weekly (mean reversion) report shows that silver will probably test the September highs of $18.26.

The monthly VC PMI silver (mean reversion) report predicts silver moving into the $17.34 to $18.00 levels.

We are getting a strong confirmation based on an intermediate- and long-term supply and demand basis (mean reversion) that the gold and silver markets are about to break out to the upside with the possibility of challenging the September highs by the end of 2017.

The VC PMI Automated Algorithm

We use the proprietary Variable Changing Price Momentum Indicator (VC PMI) to analyze the precious metals markets. The primary driver of the VC PMI is the principle of reversion to the mean, which is combined with a range of analytical tools including fundamental logic, wave counts, Fibonacci ratios, Gann principles, supply and demand levels, pivot points, moving averages, and momentum indicators. The science of Vedic Mathematics is used to combine these elements into a comprehensive, accurate and highly predictive trading system.

Mean-reversion trading seeks to capitalize on extreme changes in the price of a particular security or commodity, based on the assumption that it will revert to its previous state. This theory can be applied to both buying and selling, as it allows a trader to profit on unexpected upswings and buy low when an abnormal low occurs. By identifying the average price (the mean) or price equilibrium based on yesterday’s supply and demand factors, we can extrapolate the extreme above this average price and the extreme below it. When prices trade at these extreme levels it is between 90% and 95% probable that prices will revert back to the mean by the end of the trading session. I used this system to analyze the gold and silver markets.

Read more  CLICK HERE.

1929 Crash Again? Not Likely

Summary

Don’t sell out of the stock market because of a fear of a repeat of the 1929 crash, dot.com crash or the 2008 recession — or any other historical event happening again.

Since history is nonlinear, small differences between events can have widely different outcomes, so historical analogies are an uncertain guide to the future and can never prove anything.

Use analogical reasoning to begin an analysis, but always dig deeper into the underlying causes of the outcome of the past event before making an investment decision.

Many articles on Seeking Alpha and in many other trading and investing websites use analogical reasoning to make their arguments. Is today like 2000Is IBM like a utility? By far the most common type of analogy, however, is the historical analogy. Seeking Alpha’s search box returns more than 16,000 results for “like the 1930s” and almost 27,000 for “like the 1920s” with a strong affinity for 1929. If such articles scare you into considering getting out of the current stock market after the recent long bull run, you should think twice before making such a move based solely on arguments based on historical analogies.

Read more CLICK HERE.

The Market Is On The Brink: Where To Go?

Summary

The market is extremely overvalued.

2017 marks the end of a 17-year cycle which strongly predicts a major downturn in the market.

Comparing charts makes today’s rising market appear eerily similar to the market before the 1987 crash.

As an indicator and driver of the market, Apple stock has recently slowed and, with sales weak, the stock appears to be headed for a decline—a warning for the entire market?

Market declines have often occurred in October-December and this fall the market appears long overdue for a major correction.

In a recent report, Garrett Jones, argued for many reasons that the stock market is on the verge of a major downturn and bear market.

Overvalued Market

Today the stock market is reaching all-time highs. The NASDAQ 100 hit a top in 2000 of close to 5,000. Today, the index is well above that point at 6,113.78.  Are we set for ever-increasing highs? Nothing lasts forever and, although many believe we live in normal times, reality is far from normal today.

John Hussman of Hussman Funds, said, “What investors presently take as a comfortable environment of pleasant market returns and mild volatility is actually, quietly, the single most overvalued point in the history of the U.S. stock market.”

17-Year Cycle

Today, Jones argues, is a unique time in history.  Historically, after a period of mild volatility and healthy returns, he argues, the economy dives into a depression. Jones has analyzed a recurring 80+ year cycle and he labels three of such cycles, “a revolution cycle.” Three such 80-year cycles equals 240 years, which takes us back to 1777, during the American Revolution. With the ending of another 80-year cycle in 2017, some see another time of political instability and change marked by the election of President Donald Trump.

Jones outlines an argument based on a 17-year cycle. The year 1932 marked the low point of the Great Depression. Seventeen years later in 1949 was the start of a 17-year rally marked by high returns and low volatility when the market ran from 160 to 1000. In 1966, the Dow Jones reaches 1000 for the first time and then plateaued for 17 years. In 1983, the market finally began the longest bull market in US history and rallied for 17 years with 2000 marking the high point and the peak of the dot.com bubble.

Based on this 17-year cycle, Jones argues that every 17 years there is the start or end of a cycle. Will 2017 mark the end of the current bull market?

Sign of the Bear

Peter Eliades, with 44-years of market analysis experience, wrote that investors become complacent before market tops, so the first sign of the end of a top is a period of 21 to 27 consecutive trading days where the advance/decline (A/D) ratio remains between 0.65 and 1.95. That streak must be broken by an A/D ratio below 0.65 and confirmed by either a 2 or 3 day average A/D ratio below 0.75.  The last time we had twice as many advances as declines was on September 11, 2001: the tragic 9-11.

Jones wrote, “We have not had better than a 2:1 A/D ratio since that time. . .and a 2:1 ratio isn’t that big a deal. In a decent decade, it happens a lot.” The market is clearly indicating that it may suddenly turn into a bear market.

Market breadth or the A/D ratio line, is an excellent indicator of where the market is heading. The advance/decline line has been rising steadily for years. Has it reached an end point?

Jones also uses the McClellan Oscillator to support his argument that the market is about to collapse. He argues that the oscillator is ending a fifth wave. The oscillator hit a low when Trump was elected, with five waves since then, Jones argues. At the end of each cycle, the oscillator plunged lower than the previous cycle. When waves 1 and 3 were ending, the oscillator was “about to enter a period of almost vertical decline.” Jones argues that we are approaching a similar point now.

1987 Crash Repeated?

Gene Inger, publisher of the Inger Letter, has drawn an analogy between the October 1987 flash crash and the run up to it compared to the current market, which show similar market trends. Will 2017 be a repeat of 1987?

The market has now reached, Jones argues, “overbought levels that it has never reached before on our proprietary technical and band indicators.”

The two times it was close to such a point was in late 1996 and early 1997 during the dot.com bubble. It was then that Alan Greenspan used the term “irrational exuberance” to label the market. “It was the strongest bull market in US history at a time when the budget was balanced and we had a surplus,” Jones said. The second time was in 1987 during the strongest economic period in recent history with a popular president, Ronald Reagan. Neither period was as overbought as today and the economy today is in far worse shape with massive debt, higher unemployment and a nation divided politically facing threats from North Korea, China, Russia and ISIS.

A Rotten Apple?

GE used to be the leading market stock in terms of capitalizing and as a leading indicator for where the market overall was headed. Today that role is filled by Apple.

Jones wrote, “As Apple goes, so goes the world –give or take a little. . .Apple is without question the new bellwether stock.”

Apple represents about 12% of the NASDAQ 100 and is the largest capitalized stock in the world, as well as being the leader of the FAMG stocks: Facebook, Apple, Microsoft and Google.

 

Apple today is not tracking the NASDAQ 100; it is diverging by slowing its rise. Apple reached a top on September 1, 2017.  Why?

Apple has had to slash production of the iPhone 8and iPhone 8 Plus by “nearly 50% due to lack of demand.” Jones wrote, “This is the first time in history that production has had to be cut so soon after launch.” Priced at $1,149, the new X phone will probably do little to boost Apple’s sales, since it will probably not improve enough on past models to justify the price for most consumers.

Beware October through December

“In each year of this bull market,” Jones wrote, “there has been a correction in the October to December period.”

This is the ninth year of the bull market and another correction seems likely. The bull market is old, and it is the most overvalued and overextended bull market ever. Furthermore, Jones argues, we have not had a correction this year. The market is also not up because the economy is humming; it is up because of Qualitative Easing and the government printing money.

Fall corrections in this bull market have ranged between 2.83% and 10.37%, with an average 6.31% decline. This fall the market appears to be primed for a correction.

Credit and the Market

Jones shows how rising markets have coincided with increases in investors’ negative credit balances. When the market falls, investors have positive credit balances. Today, investors’ negative credit balance has reached more than $250 billion, while the S&P 500 has reached new highs near 2500. This data suggests the market is on the verge of a major correction.

Highs Obscure Previous Highs

Before the 1929 high just before the Great Depression, the stock market set several new all-time highs. None of them are remembered, because the high in 1929 marked the high point before the crash. The highs the market set in 1987, 2000 and 2007 will not be remembered if the market crashes in 2017. Why? Because the high of 2017 for the Dow Jones Industrials of 23,232 will be remembered as the high. Be prepared for a massive fall in the market.

What to do? Gold

If the stock market is massively overvalued, what should you do? Where do you put your money? Government bonds, bills and money market accounts pay almost no return. During the last bull markets, bills and money market funds paid well, such as 15% in 1981.

“When 15% is on the table as the alternative, the decision is easy,” Jones wrote. “With zero currently on the table, the tendency is to remain in the market. While the ‘zero option’ is real, the other reality is potential loss. Zero looks attractive when compared to a negative.”

In such times, with the market apparently on the brink of a major correction, gold is a safe haven. As I argued in previous posts, gold is set to begin a long-term bull market. Gold mining companies have slashed production costs and are poised for sharp increases in the price of their stock. If bonds, bills and money market accounts offer safe havens with almost no return on your investment, gold offers a safe haven with considerable upside.

*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts. This report is for educational purposes only.

 

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