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Ira Epstein's Weekly Metal Report



-- Posted Tuesday, 30 June 2009 | | Source: GoldSeek.com

Seasonal Story

The chart below was supplied by The Moore Research Institute.

The Seasonal Gold Chart above displays gold price movement in several ways. First, the red arrow shows where we’re at now. Next, the blue line is made up of the past 15-years of data to calculate a current average of prices. The red line covers the past 35-years of data, showing a longer averaged time frame. Historically speaking, prices trends are fairly erratic to lower in summer months. It’s at the end of summer that uptrends often take hold.

That having been said, gold’s tendency is to weaken right now, bounce a bit into July and have a final downside washout near month’s end. The important thing to remember is that in terms of market momentum, the month of July often sets the seasonal low going into fall and winter.

Iran, North Korea, Nigeria, China

The hotbed this week centers on what’s going on in four countries. When gold is in a bullish mode, almost any mention of problems in terms of armed conflict or political unrest has a bullish influence on gold prices. The opposite is true when gold puts on its bearish face.

Iran is standing by its election results and has engaged in a war of words with the US and Britain. The Iranians think the ‘west” is interfering with internal Iranian matters. It remains to be seen if the internal conflict is coming to an end or not, but in terms of “press”, it seem to be losing steam.

North Korea is “baiting” the US. First, they say they are sending a missile towards Hawaii when they next test their missile fleet. Now a cargo ship on the high seas, supposedly carrying nuclear parts that Korea needs, is being trailed by a US warship. The cargo ship must eventually stop in port to refuel. The dilemma is that if the US won’t board the ship, why would the army of any foreign country where the ship refuels do so. If the US intelligence is indisputable, the US would and should board the ship at sea. If this doesn’t occur before the ship docks, I seriously doubt the ship will be boarded while in port and most likely will make it to its destination.

Nigeria’s militant groups are once again at it, blowing up oil pipelines, which sent oil prices higher earlier in the week but had little to no influence on gold prices.

China floated ideas of moving away from the Dollar, moving into gold and stockpiling oil this past week. Last night they said they have faith in the Dollar and see their reserve policy as stable.

Whipsaws

I view the current chart action as bearish.

Let’s take a look at a Daily Chart of August Gold to what’s going on.

Look at the Stochastic Study on the bottom of the chart. Stochastics are made up of two lines. The “K” and a “D” line. The “k” line is displayed as the red line, “D” line as the yellow line. The lines are set between an axis reading of 20 up to 80. The Stochastic formula is set to have the red line whip around the yellow line.

When both lines are under 20 or over 80, they are “embedded”. As long as they stay embedded, in theory at least the trend should be bearish. This ends when the red line closes over 20.  The red line came out of its embedded status last week, on June 24th. When this occurs prices often move up to challenge the 18-Day Moving Average of Closes. This was hit on June 26th. Once hit, the upside objective is made.

Now Stochastics are rolling over. They are not yet in oversold territory which would be a reading under 30. Right now they are just pointing to downside momentum at work.

Conclusion and Recommendation

Today’s chart pattern is that of an “Outside Day Down”. Prices have broken both Monday’s high and low. More importantly prices are lower on the day. Until today’s high is taken out, assume that 945.4 will be the new high. It is lower than the previous high of 949.0 and today’s low is lower than 933.6. Therefore a downtrend is at work again. One this is not yet in oversold territory and has prices trading under the 18-Day Moving Average of Closes.

 

The yellow chart study, called the “Swingline” has turned down. Its chart pattern is now one of lower lows and lower highs.  Until the most recent high of 945.4 is taken out, the odds are good that prices will try to work down to their next support level, the Bollinger Band Bottom near 915.7.

 

My idea is to sell short at 940.1 with a stop over today’s high of 945.4. Take profit at 915.7.

 

I of course will update my thoughts in my twice daily written and oral updates. More on that below.

 

 

 

 

Research

 

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MEATS: live and feeder cattle, live hogs, pork bellies

SOFTS:  sugar, cocoa, orange juice, cotton, coffee

 

and just about every other futures market covered.

 

 

Call us to receive your copy of the recently updated 2009 Linn Group Commodity Markets Outlook, that covers with graphs and verbiage an in-depth analysis of what The Linn Group thinks many markets will do in 2009. Updates to this are sent out a few times a year as well.

 

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Just call 1-866-973-2077.

 

 

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.


-- Posted Tuesday, 30 June 2009 | Digg This Article | Source: GoldSeek.com




 



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