-- Posted Thursday, 4 October 2007 | Digg This Article
10-4-2007
Let me remind those who follow this report that I now record and publish two Mid-Day Video’s: One on Gold and Silver along with one on Stock Indices. I intend on mixing in other markets as well and do a bit of teaching in some of the videos. These are in addition to the in-depth nightly video I record that covers charts and my market opinion on all the major futures markets.
The link to my Mid-Day Videos is below. Be sure to click on the RSS feed to know when a new video is posted. I do my best to record and get these posted by 1:00 P.M. CST.
http://www.iepstein.com/videos_start.aspx
Friday’s Employment Report and Seasonality…….
Bull Markets need constant feeding as markets don’t continue discounting the same news over and over. Rather, they require “events” to get them moving along. The next “feeding event” takes place tomorrow, around 7:30 A.M. CST and comes by way of the Unemployment Report. Today’ Factory Orders and Claims Data showed a slowing economy was still at hand.
The consensus amongst market analysts is that job growth has not, I repeat has “not” picked up. In fact, if more jobs are lost, the Fed will have the fodder it needs to explain away another cut in the Fed Fund Rate by the end of October. Should the Fed cut rates again, I would expect that to lead to a lower US Dollar, which in turn should prop up gold and silver prices. On the other hand, if the Unemployment Report is neutral or shows a surprise, the surprise being job growth, the market will quickly factor in the possibility of no Fed Fund Rate cut this month, which should result in gold and silver prices initially declining.
In last week’s Gold Section of my Weekly Metals Report here’s what I wrote, “When you view the Seasonal Gold and Silver Charts below, it becomes evident that a pullback in October is not uncommon.”
As of today, gold is down approximately $7 on a closing basis for the month so far, but has already fallen intraday nearly $24 from September’s closing price.
Since last week’s report, I have NOT issued any new recommendations to buy or sell using futures, but have issued a buy recommendation using Options on Futures. So far my recommendation has not been filled.
One final point. I realize that we read reports about benign inflation. However, crude oil is near $82 a barrel and every product made from petrochemicals is moving up in price that I am aware of. Milk prices continue to soar and commodity prices as a whole, continue in an uptrend.
December Gold
The Seasonal Chart below was provided by the Moore Research Center, Inc.
The above Gold Seasonal Chart “measures market price momentum”.
As you can see, momentum is down, often strongly down in October. I told readers at the end of last week, which happened to coincide with September’s month end, to liquidate all remaining Bull Gold Call Spreads. Those that were long did exceptionally well as their positions if established off of my recommendations were put on in Mid-August, which is gold’s current low point.
The above chart tells why I recommended getting out of these spreads. Simply put, the gold market often loses upside momentum in October. I pay close attention to price momentum and recommended a complete liquidation of long positions, which as it turned out, was the right thing to do.
Now the market is waiting to see what the Fed does or doesn’t do concerning the Fed Fund Rate. I still believe that another ½ point Fed Fund Rate cut is possible before year end, but am not willing to play using futures contracts for it, at least at this point in time. Rather, I recommend using Options on Futures since you can “buy time”, in essence options often allow you to slow the game down a bit, while getting you into position for what I hope turns out to be upside year end traction.
Conclusion and Recommendation
Start by looking at a current Daily December Gold Chart.
As you can see prices are now trading within the Bollinger Bands, which are the white bands on the above chart. Price action is currently centered on the 18-Day Moving Average of Closes, shown in “red” on the above chart.
I recommend buying the December Gold 750 Gold Calls on a pullback to the Bollinger Band Bottom, which is currently near 712.6. I don’t want you to chase prices higher just yet, given the tendency of prices to lose upside momentum this month. Pullbacks are to be used to establish either a Gold Call or Spread in Gold Calls.
I need to see the markets reaction to tomorrow’s Unemployment Report to better refine my trade recommendation. Once I see the report, I will wait for the close of business tomorrow and make any necessary modifications, if my recommendation below is not filled.
Until than, I recommend entering an order to by a December Gold 750 Call at 6.60. If filled I will update stops and the like in my Twice Daily Updates, which you can either subscribe to or have a FREE 30-Day Trial to if you’ve not had access to them in the past.
Silver
Seasonally speaking, silver is often under price pressure in October according to the historical chart below, provided by Moore Research Center, Inc.
Like gold, silver prices historically speaking lose their upside momentum in October.
Look at the Daily December Silver Chart below. Last week I made mention that the Stochastic Study was in a precarious position and could easily get under an 80 reading. If it did so, I said that prices should move down to the 18-Day Moving Average of Closes, which it has now done.
I want to say this again. Do not buy silver on rallies at this time of the year. Rather, set in place a strategy that attempts to take advantage of silver’s history of not having upside momentum in October.
Conclusion and Recommendation
Should December futures drop down to the 13.09 level I recommend that you consider establishing a position in the December Silver 1300-1350 Call Spread. I don’t intend on risking that full amount of the purchase price, as I have no intention on hanging around until expiration if the spread is not performing well. Rather, if you get a fill, I will adjust using my Twice Daily Reports which I both e-mail out and publish on my website at www.iepstein.com.
If you haven’t had a FREE 4-Week Trial to our Twice Daily Market Recommendations and access to our nightly videos where we review charts nightly, go to http://www.iepstein.com and fill out the New Investor Kit Form. We will send the kit and access to our research to you.
As long as you haven’t had access in the past year, you can obtain a Free Subscription to receive access to all of our research, including Nightly Audio/Video Recordings where we cover in detail all the metal markets, when you fill out the New Investor Kit Form on our website.
Free Offering
New Futures Trading Kit
Our FREE New Investors Kit is contained on a CD. It includes:
14-Day Trial to our Charting Software with:
· Live Streaming Quotes from the CBOT and the CME
· Paper Trading
· Price Ladders
· Streaming News
14-Day Access to our Nightly Audio/ Video Report
14-Day Access to our Twice Daily e-mailed Market Research
Brochures, Booklets and much more…all on the New Investor Kit CD
For Self-Directed Traders that want to or are trading the fully electronic Metal Markets, please look below at our commission rate. If you’re trading elsewhere, you’re most likely paying too much..
Simply mention this Special Offer to your IECo representative when you open your New IECo Trading Account. They will take care of the rest for you!
As Exchanges and Vendors raise and/or lower rates, those changes are passed on. The Fees and Commission being quoted are on a per-side basis and are all inclusive!
Volatility is here. That’s what traders thrive on.
Take advantage of trading conditions by using our super low commissions and great trading software which make it feasible to enter trades where commissions aren’t much of a decision factor, placing the burden where it belongs. On being right the market! It’s really that elementary.
To learn more about us or to get started trading through us simply go to our website at http://www.iepstein.com and fill out the New Investor Kit Form. A CD-Rom will be sent to you. At the same time you will instantly begin receiving access to and instructions on how to access our daily market research, trading recommendations, charts and much more.
If phoning us is easier for you our phone number is 1 800 284 3010.
We handle trading accounts from individuals in a number of foreign countries as well.
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 Ira Epstein & Company or Shatkin Arbor, 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.
-- Posted Thursday, 4 October 2007 | Digg This Article
