Market Overview

Gold Metals Market Watch: The Current EchoVector Analysis Forecast And Trade Strategy For Gold Going Into August Of 2014

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SUMMARY
 
  • Both the month of August and this coming week in the month of August are very important periods cyclically this year in the gold metals market.
  • Technical support in the gold metals market in the significant 4-Year Presidential Cycle EchoVector, and in the 2-Year Congressional Cycle EchoVector, and in the Annual Cycle EchoVector, and in the 6-Month Bi-Quarterly Cycle EchoVector all converge this coming week.
  • Technical support and price lift the second half of this year are important. Especially in further constructing this year as a basing year. Without sufficient price support and seasonal price lift this year the 4-Year Presidential Cycle Price Momentum EchoVector could easily pivot clockwise into negative slope momentum adding further downward technical weight and price pressure to the gold metals market.
  • The historically stronger period of seasonal support within the annual cycle of gold and silver prices is about to begin. It, along with a perceived overbought stock market prices and potential looming correction, added to recently announced further Fed Bond Purchase Tapering, may lead some sidelined gold and silver traders to again re-consider potential prospects for additional risk-on positions in gold and silver.
  • The shorter Quarterly EchoVector and Monthly EchoVector both add little support to gold prices and price lift at this juncture, so stops are particularly warranted in risk-on positions.
 
BACKGROUND
 
The month of August is a particularly important month in the gold and silver metals markets on a technical echovector pivot point price analysis basis.  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 as what is historically the beginning of 2ND-half year seasonal price strength to support their aspirations for stronger gold and silver prices forward. Looking back at a chart of prices throughout this presidential cycle week can find this repeating occurance.  To view a chart highlighting this August effect and read further discussion, see to last year's timely August article,"As In Previous Quarters, This Is A Very Important Week In the Gold Market"
 
This week also marks the anniversary of a very prescient set of article's I wrote on this subject in the summer of 2013.  In these articles I focused on a cyclical price momentum echovector pivot point price projection framecharts from an EchoVector Price Analysis Perspective reviewing them for the possible occurrences of annual price symmetries that might be forming, and these formation's potential trading implications forward.  This year the gold and silver metals markets are setting up once again for an important August month, and this coming week's coming price action appears in focus as particularly significant.
 
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
 
The following GLD ETF EchoVector Pivot Point Price Analysis Framechart reveals very interesting recent price action. It highlights how the annual time cycle price momentum echovector recently pivoted clockwise, from positive to negative slope rate directional momentum (the longer solid white line compared to the longer solid red line that begin later and is highlighted in this chart).  However, also note how this past Friday's "closing price annual cycle price momentum echovector (AEV)" is pivoting counter-clockwise back again from these previously "clockwise pivoting" momentum echovector slope rates, at the margin.  This can be seen in the next solid white annual echovector, that follows the previous two mentioned, also 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 may soon become apparent and timely, particularly on the annual echovector basis. Note also how the solid yellow bi-quarterly echovector (in solid yellow) also currently supports this thesis as well. 
 
The approaching week's echovector pivot point strength does not end with the annual echovector either.  EchoVector Pivot Point Strength in the bi-quarterly cycle echovector (2QEV), the annual cycle echovector (AEV), 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 forward.  
 
The shorter quarterly cycle echovector (QEV), however, provides little support to lift, and the monthly cycle echovector (MEV) actually countervails lift.  So stops are particularly warranted for venturing long side risk-on potential positioners.
 
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.
 
Click on the following links to review each of the echovector framechart perspectives referenced in this analysis.  They may also be reviewed at GoldPivots.
 
ANNUAL CYCLE ECHOVECTOR PERSPECTIVES FRAMECHARTS
 
2-YEAR CONGRESSIONAL CYCLE ECHOVECTOR PERSPECTIVE FRAMECHART
 
4-YEAR PRESIDENTIAL CYCLE ECHOVECTOR PERSPECTIVES FRAMECHARTS
 
 
ADDITIONAL FRAMECHART FOOTNOTES AND OBSERVATIONS
 
1.  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.  GLD ETF 2-YEAR CONGRESSIONAL CYCLE PRICE MOMENTUM ECHOVECTOR FRAMECHARTS:  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 "end of May" 2-year yellow congressional cycle price momentum echovector key are both parallel and overlap and their echobackdates are well in phase, and Friday's closing price annual cycle and congressional cycle echovectors are well coordinated with them as well.
 
3.  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.  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.
 
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
 
Kevin Wilbur
Contributor, Alpha Brand Newsletters Group
Chief Market Strategist And EchoVector Analyst 
PROTECTVEST AND ADVANCVEST
 
Kevin John Bradford Wilbur is the Chief Market Strategist and Senior EchoVector Analysis Methodologist at PROTECTVEST AND ADVANCEVEST. He is a prize-winning Economist and Financial Physicist with an over 35 year span of experience and awards in Academics, Research, Management, Practice and Trade. Kevin has specialized experience in the Major Market Indexes, Commodities, ETFs, and in derivatives and the derivatives markets.
Search market pivots to read more about Kevin John Bradford Wilbur and his specialty, and about THE MARKET ALPHA BRAND NEWSLETTER GROUP.
See http://echovector.info and http://seekingalpha.com/author/kevin-wilbur
 
For further information on constructing and calculating echovectors, coordinate forecast echovectors, and echovector pivot points, see "The Simple Single-Period EchoVector Pivot Point Calculation".
 
For further information on constructing and calculating otaps-pps position polarity cover and/or switch signal vectors and their trigger points, see "The On-Off-Through Vector Target Application Price Switch And Position Polarity Cover And/Or Switch Signal Vector Trigger Points".
 
 
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