Silver Q4 Seasonal Outlook / Commodities / Gold & Silver 2019

What has beenwill be again,
what has beendone will be done again;
there is nothingnew under the sun.

Historyrepeats itself. Not always, and not 100%, but often enough and to an extentthat’s significant enough to make these repetitions potentially profitable. Inorder to take advantage of this tendency, we created a tool called TrueSeasonals (and we are now providing it free ofcharge). If you heard about seasonality, you already know what to expect, butyou may not know what you have been missing. Many things take place at the sametime each year (for instance people making a lot of jokes on April Fools’ Day),but quite a few of them take place only more or less regularly.

What’sthe exact date for Thanksgiving in 2023? You probably had to check as it’s notthe same date every year. In trading, there are also things that tend to happenregularly (like rallies in January), but there are also things that happen onlymore or less regularly that also impact prices – for instance the expiration ofgold and silver options. Simpleseasonality charts only take into account what’shappening regularly, and they do not directly include the impact of theexpiration dates of derivatives. We added this effect to regular seasonality,creating the True Seasonal charts.

Wealso checked how similar the patterns are in each of the recent years and basedon that we created the Accuracy metric. If similar things happened at a giventime of the year over the years, this pushes Accuracy higher. In such a case,it seems more likely that these similar things would also be repeated thisyear.

Making Seasonality a Tool in YourArsenal

Inour weekly seasonal reports, we will be giving you a heads up on what the TrueSeasonal charts are currently suggesting for several markets.

Seasonality,though, is just one technique, just one tool – and not a complete analysis of agiven market. While an insightful measure on its own, and robust in the way wecalculate its data for you, it’s not a Holy Grail in itself. It can be one ofthe great and versatiletools in your armory – it has many applications suchas additional guidance in reading the market context, a helpful tool in timingand estimating corrections before they happen, an extra basis for yourreversion to the mean strategies, a profitable filter for many a trading systemyou’re using currently, or a valuable addition to your options tradingstrategies (be they directional or not). Imagination is the limit.

Pleasethink about seasonality as you would approach e.g. the RSI, Stochastics or anyother indicator – these are useful on their own, but more things should betaken into account before making investment decisions. For more details, youmay want to read our seasonalityreport.

Pleasedo tell us how you like this Seasonality Weekly Report. How can we make thefollowing ones even better for your needs? Feedback is welcome and appreciated– drop us an email.

Havingsaid that, let’s move to the analysis itself. In today’s issue, we discusswhat’s in store for the price of silver.

Silver Seasonality

Let’stake a look at the first chart. It is our proprietary Silver True Seasonalitywhere we combined the regular seasonality with the effect of the expiration ofoptions and accuracy estimation. The yearly seasonal pattern of the price ofsilver was calculated using a 17-year-long period from 2002 to 2018 and thenadjusted for the expirationof options that we observed between 2009 and 2018.

Wecan see that the market has a tendency to go down in April and persist in sucha move until June. That pattern worked quite well from April up to the late Maythis year. Then the price of silver rallied and in July it broke above itsearly-2019 highs. While the rally came early compared to the usual seasonalpattern, seasonality still would have been a pretty good guide through theApril-May period.

So,the market went into “rally mode” a little bit early compared with its usualseasonal activity in the Spring. Again, this is the part we have mentionedbefore – no pattern is perfect, and history does not copy itself to a T.

Withthe increased volatility in silver, it is particularly interesting to see whatthe seasonal analysis would have suggested for the white metal near the turningpoint which came in late August/early September as the price was hitting verysignificant highs, even ones above the 2017 highs. To figure this out, we couldnot only look at the indications for the price but also at the Accuracyindicator.

Let’stake a look at the quarterly seasonal pattern of the price of silver for thethird quarter. It gives us a more detailed seasonality pattern picture, alongwith the Accuracy.

Thechart shows us that the market tends to rise quite significantly at the end ofAugust but breaks down almost as significantly in the first week of September.This is precisely the time frame that would interest us for the purposedetermining a possible move in August. Most importantly, it suggests that a majorbreakdown can transpire at the beginning of September. The analogy might not beperfect, but still, if you are witnessing a rise in the price of silver, youmight be interested in the fact that the move could break down in the nextweek. And even if the actual move is off by a couple of days, this could stillbe very valuable information. One more thing we would like to discuss is therise in the Accuracy metric following the breakdown. It suggests that a movedown is even more likely than if the indication was only based on averageprices.

Let’stake a look at the real price of silver (daily chart courtesy of http://stockcharts.com):

Themarket corrected in line with the indications of the True Seasonal charts. OK,this is all great but what is the possible indication for the next importantmove? To answer that, we have to revert to the seasonal chart for Q4.

Andthere you have it. The first significant move suggested by the Q4 silverseasonal chart is quite a significant drop in the price of the white metal. Thedefault position to interpret True Seasonals is to see what the indications areand compare them with other factors. Fortunately, the immediately bearishindications for silver are reinforced by other factors discussed in our Gold& Silver Trading Alerts.

Thisconcludes our first analysis of current seasonal charts. We hope this helps younavigate the market and gain the necessary tools to become successful in thisspace.

Wehope you have enjoyed this week’s discussion of TrueSeasonal trading and we invite you to experimentand make these tendencies work for you – our Seasonality charts are freelyavailable right on our website.

Weencourage you to sign up for our daily newsletter, too - it's free and if youdon't like it, you can unsubscribe with just 2 clicks. If you sign up today,you'll also get 7 days of free access to our premium daily Gold & SilverTrading Alerts. On top of that, you’ll also get 7 days of instant email notificationsthe moment a new Signal is posted, bringing our Day Trading Signals to yourfingertips. Sign up for thefree newsletter today!

Regards,

MikeMcAra

BitcoinTrading Strategist

Bitcoin Trading Alerts at SunshineProfits.com

Disclaimer

All essays, research and information found above represent analyses andopinions of Mike McAra and Sunshine Profits' associates only. As such, it mayprove wrong and be a subject to change without notice. Opinions and analyseswere based on data available to authors of respective essays at the time ofwriting. Although the information provided above is based on careful researchand sources that are believed to be accurate, Mike McAra and his associates donot guarantee the accuracy or thoroughness of the data or information reported.The opinions published above are neither an offer nor a recommendation topurchase or sell any securities. Mr. McAra is not a Registered SecuritiesAdvisor. By reading Mike McAra’s reports you fully agree that he will not beheld responsible or liable for any decisions you make regarding any informationprovided in these reports. Investing, trading and speculation in any financialmarkets may involve high risk of loss. Mike McAra, Sunshine Profits' employeesand affiliates as well as members of their families may have a short or longposition in any securities, including those mentioned in any of the reports oressays, and may make additional purchases and/or sales of those securitieswithout notice.

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