This is the Variable Changing Price Momentum Indicator (VC PMI) Mid-Week Special Report for the gold and silver supply and demand levels.
The gold market closed on Friday at $1229 and with the market closing above the 9-week moving average of $1208, we came into this week with a bullish sentiment. The VC PMI also tells us that if gold closes below $1208, this bullish sentiment would be negated.
The VC PMI identified the weekly average price as $1229 for this week. With the market closing at $1229, it gave us a bullish indication, but it also tells us that if we close this week below $1229, this bullish confirmation would be negated.
Patrick MontesDeOca, founder and CEO of the Equity Management Academy and creator of the VC PMI algorithm said, “We use the 9-week moving average as one of the leading components of the VC PMI, which is able to identify the short-term to intermediate trends in the market. The artificial intelligence (AI) behind the VC PMI tells us that if the price closes above or below the 9-week moving average, it would neutralize the signal for us. In addition we use the average price because once we are able to identify the average price, we can begin to extrapolate the extremes above and below the mean.”
In this case for gold, with the market closing at the average price of $1229, it gave us a bullish indication and activated the sell 1 (S1) level of $1237 and the sell 2 (S2) level of $1245. The VC PMI also gives us the other side of the trade; if the price does come down during the week to close below $1229, it activates the bearish or short side of the market, activating the targets below the mean at the buy 1 (B1) level of $1220 to the buy 2 (B2) level of $1212.
As I write this report, the current price of gold is $1243. Gold has come right into the supply zone of $1237 to $1245. If you have been long, following the recommendations based on the VC PMI in my previous reports, this is a good place to reduce your positions, takes some profits and wait for a retracement or reversion back down to the levels of B1 and B2. For this week, those levels are $1220 and $1212.
The silver market on October 19 closed at $14.65. The VC PMI identified the 9-week moving average as $14.53. With the market closing above the 9-week moving average, we are coming into this week with a bullish trend momentum. The VC PMI also tells you the other side of the trade; if silver does close below $14.53, it would negate the bullish trend momentum for this week.
The VC PMI is able to identify the weekly average price for this week of $14.66. With the market closing slightly below $14.66, we still come into this week with a bearish sentiment. The market has to close above the average to change the sentiment of the market.
Even though we came into the week slightly bearish, we also told you that if we trade and close above $14.66, it would negate this bearishness. A close above $14.66 activates the targets of the extremes above the mean of S1 at $14.86 and S2 of $15.08.
As I am writing this report, the high that we made this far in silver is $14.84. So we are moving right into the supply zone of the silver market and we recommend that if you’ve been following us, especially since our September 28 annual report we published on Seeking Alpha, we are into an area where we recommend you lighten up, take some profits off the table, and let the market adjust and revert back below the mean to the B1 and B2 levels. If the market closes below $14.66, it would activate the bearish trend and the B1 and B2 levels of $14.45 and $14.25. These are the areas where the VC PMI recommends you cover your short positions, and reverse your position and go long.
For the second time the gold and silver markets have tested these target zones that the VC PMI has identified over the past couple of weeks. The markets have given us the opportunity to take some profits, reduce positions, and maintain our long-term bias to stay long and buy corrections. The short-term and intermediate trends are meeting targets we have been anticipating for the past few months.
The information in our reports was obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinions expressed in this report constitute a solicitation of the purchase or sale of any futures or options contracts. It is for educational purposes only.
Disclosure: I am/we are long GLD, GDX, GDXJ, USLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.