Silver: The Canary In The Gold Mine?
Patrick MontesDeOca | Oct 21, 2016 05:31AM ET
On September 20, Patrick MontesDeOca, CEO of the Equity Management Academy, reviewed an Academy report published over the weekend that correctly predicted the activity in the silver market this week.
MontesDeOca said the silver market was “Going to be pretty volatile” this week with the FOMC meeting Wednesday, which will consider what to do with interest rates. He said, “I think it is simply what I call chatter. To reduce that chatter, I use this methodology shown in the live trading room” at the Academy.
The methodology is the Academy’s VC Price Momentum Indicator, which relies on identifying supply and demand.
MontesDeOca said that once silver went through the resistance level on July 1, it moved “decisively up,” accelerating as was predicted in the weekly Academy report.
Silver is now trading just below the July 5 high of $21, 22. MontesDeOca said the price has got to the extreme above the mean. Using moving averages, the Academy’s methodology plots specific levels and pivot points for when to enter and exit the market. As one pivot point is reached, it triggers the next set of points.
MontesDeOca said, the market has “supply to challenge at $19.50 to $19.71. If the buying/demand energy is greater than the selling energy, with a price above $19.71, then this level of resistance will change into a level of support.
In a weekly Academy report published last Saturday, MontesDeOca said, “The market in silver seems to be telling us a different story than the gold market.”
Silver closed Friday at $18.86, which was below the 9-day moving average that the Academy uses to identify the trend momentum of $19.53. Therefore, he said, the market is “bearish,” because it closed below the average. If the market closes above the pivot point of $19.53, it would negate the bearish sentiment.
The mean for the average price this week is $18.97. The market closed at $18.86 Friday, but if silver goes through $18.97, it is a bullish indication, because the market will penetrate the average price of $18.97. When the silver market moved through $18.97, it negated the bearishness, and kicked in a buy signal from $18.96 or below. The low was $18.71 on the 16th and on the 19th the low was $18.84. However, the market came right below the mean of $18.97 and closed above it, which, MontesDeOca said, “basically indicated the market sentiment is turning bullish.”
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