"YELLOW METAL ROADMAP"Roadmap......Gold is approaching strong overhead "Potential Resistance" into "Time".
Breaking below the inflection point of 1142 increases the odds to attack deeper
targets.
GDXJ
GOLD "ARE YOU PREPARED"POTENTIAL SYMMETRY MOVE MAPPED OUT FOR THE YEARLY PATTERN. IT LAYS OUT THE EMOTIONS OF THE MARKET. :PRICE ACTION" IS EVERYTHING.
PLAYING GOLD -- AREAS OF STRENGTH/WEAKNESS TO WATCHAs with playing the underlying directly, sometimes it pays to watch levels in a given underlying for options setups as well and to abide by the whole trading adage: "Sell on strength; buy on weakness."
In this particular case, I'm looking to sell short call vertical credit spreads on strength and sell short put vertical credit spreads on weakness and am keeping an eye on two areas: the "strength" area around 1190 and the weakness area around 1050 in XAUUSD to setup up credit spreads in GLD or in one of the other cheaper XAUUSD proxies -- GDXJ or GDX. (Although there is some argument to be made that a valid strength area would also be around 1160).
In comparison and contrast to trading the underlying directly, however, I'm not necessarily looking for price, for example, to strike 1190 to sell a short call credit spread. Rather, I'm looking for XAUUSD to express sufficient strength such that I can sell a short call vertical for a reasonable credit with strikes above that strength area -- naturally, the more strikes the better such that I either (a) have a reasonable shot at the spread expiring worthless; or (b) getting me out of the spread at 50% max profit at some point prior to expiration.
In the "short term," XAUUSD looks to be of a consolidative mind around that late July "dump zone" around 1100 and is expressing some difficulty making its way past 1100 to the upside or falling apart in tatters back toward 1050. But my hunch is that I'm going to entering short put credit spreads below that 1050 area before short call credit spreads above 1190 (or 1160 if it turns out that is a longer-term area of resistance than initially anticipated).
GOLDXAUUSD or Gold has reached an overbought position. Similar to previous time, as noted by the red circles you can expect a pullback to consolidate. I do expect the uptrend to continue this may be a buying opportunity.
CHEAPER WAYS TO PLAY GOLD -- GDXJ/GDXFor the longest time, my go-to to play gold is GLD, which is intended to emulate the price of gold bullion. However, this can tie up a disproportionate percentage of buying power due to the price of the underlying.
Naturally, there are alternatives out there to GLD that are either ETF's (like GDXJ and GDX) or outright securities in companies that acquire, develop, and operate precious metals properties (e.g., AUY, GG, AEM, KGC, ABX). Although some of the individual names are better than others, they all seem to be struggling to varying degrees in this market, and it is possible that some of them will not survive bullion's downturn from the atmospheric highs gold experienced in late 2011. Because of this possibility, I would opt going for an ETF over an individual name in this sector to reduce the risk that taking a position in an individual name entails (i.e., total implosion; AUY comes to mind).
Neither a GDX short strangle nor a short straddle will yield much premium here. Selling a naked short put at the edge of the expected move to the downside in the underlying (around the 12.5 strike for the Feb 12th weekly) will yield about $30 in premium/contract; not that great a figure after fees and commissions are considered. Additionally, doing a covered call here isn't quite up to my standards, since a Feb 19 covered call setup with a short call at 14 would only yield a max profit of $99 if called away with a $13.01 per share cost basis ($99/$1301 < 10% ROC).
The best thing to do is probably wait for higher volatility in the underlying to make a play (it's below the 50th percentile right now for the past 52 weeks), since this will make premium richer for a covered call setup. Right now, then, good for the watchlist as an alternative to a GLD trade going forward ... .
Gold Miners Run Up to Key ResistanceGold mining stocks have been trending higher, along with the overall U.S. equity market, of late. The recent support in gold prices allowed the Market Vectors Gold Miners ETF (GDX) a strong close last week, pushing 15 percent off the November 18 low.
Gold mining stocks really get a pass from traders, and it is still early to determine whether the move will last or not. And, this could depend largely on whether or not the Federal Reserve tightens monetary policy for the first time since 2006. If the Fed does hike rates, gold prices could suffer.
Currently, GDX has been able to close around the 50 percent Fib. retracement on the October 15 high. The daily candle closed near the top of its range on strong volume. The ADX is ticking upwards with a concurrent upward movement in + DMI, and this can garner stronger upside potential.
Conversely, the GDX could see resistance at the 50 percent Fib. level, which also coincides with trend resistance (broken support). A reversal at current levels could send the mining ETF $14.20/00, while deeper price support lies at $13.38.
Further upside momentum would cause the GDX to test the larger, downside trend line between $15.50 and $15.75. If the Fed fails to hike rates in a mere week, the GDX will retest the 200-daily EMA.
Stock pickers could find undervalued gems in the mining space. Meera Shawn, Market Realist, points out that some miners have down quite well this year: Agnico-Eagle Mines (AEM), up 11.2 percent; Centerra Gold (CG), up 31.2 percent and Alacer Gold (ASR), up 8.4 percent versus a 23 percent decline in GDX as a whole. It is important when choosing commodity producers to look for strong balance sheets and low operation costs. This helps producers whether pricing declines
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GLD -SPDR GOLD - MONTHLY DOWNTREND FAILED APRIL 2015For the big picture of gold, look at the monthly time frame. What is the story that the monthly chart is telling us? It is showing us that Gold has FAILED to make a new low after bottoming back in November at 109.67: December, January, February, March, April all failed to push new price lows and that is a sign that the sellers are not only extremely patient, but maybe they are running out of ammunition. Time tells us a lot about a market and time tells us MORE than volume.
What we need to see now is for GLD to lift over the "mode" which I have labeled here on the chart with the light yellow box. The mode is from 114.29-115.96. It won't take a genius to point out that gold will be bullish if it gets over 115.96, but I think I can state with some degree of confidence that it will likely go over that level for the simple reason that GLD didn't break under 109.67 since November.
Another point to make is the VOLUME RESISTANCE line up at 124.70 which was the upside target from back in January when GLD accumulated and set up for the rebound to 124+.
Keep a CLOSE eye on GLD here. The BIG KICKER will be whenever China announces their gold holdings and that could dramatically shift opinion on GLD since it is very rarely disclosed. The Chinese gold holdings are supposedly less than a 1% reserve against their paper reserves (bonds, notes, bills).
Junior Gold Miners coiling in low vol p/back.$GDXJ has shown signs of accumulation since Q3 2014. See Excess Demand/Supply signals. It appears $GDXJ is getting ready to outperform $GDX Gold Miners etf (see chart shown below). $GC Gold futures also have shown accumulation. I am planning to leg in to the Juniors. To reduce risk I prefer to invest long in the Gold Miner etf's.
All is not lost in GoldGold is oversold on the 4hr RSI chart. Gold Bears are out and about in full force still and are playing for some sort of imminent breakdown in the metal. There is still alot of interesting things happening in the gold market. Prominent Gold bulls are proclaiming a shortage in the physical metal and massive demand by eastern forces.
Big things are afoot in the gold market and there could be a Rally that catches many off guard and out of position, fooling everyone by rallying in a deflationary environment (In USD)
There may be deflation in America, but there is rampant inflation in many other emerging markets and currencies. The demand for gold in foreign markets may be enough to boost gold prices worldwide.
No loose ends. But GOLD U leave me hanging on a positive string!It's a normal linear scale chart which gives another impression of gold than the logarithmic charts I published yesterday. (See links below).
The whole chart cant stay within the picture but push the "-" bottom to see the trend lines. Fits well in a channel.
Seems like gold is hanging in there.... on a sting!
I have looked at the EW count as an 5 wave down and therefore not corrective. I'll look into to it again to see if a corrective count is possible. I'll return later on that part.
Production cost for miners should be in the neighborhood off $1100. A stop around and a reversal here will keep the miners alive. An gold is continuously in strong demand. Google it....
Safe trading ladies & gents!
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GDXJ Potential Short SetupThe Junior Gold Minors GDXJ finished a wave 3 down on the daily chart. It has now completed an abc correction into wave 4. The MTPredictor indicators generated a TS2 automatic sell signal at 27.14 with a stop at 29.77. The initial target is 21.99 which is the minimum wave 5 target. If price does not hit 27.14 (the entry) and instead moves above 29.77 first, then the trade is invalidated.
If the Swiss referendum fails, we may see further declines in these stocks.
One to WatchGDXJ is coming off an important low on the weekly chart. MTPredictor found this abc correction and generated a long TS3 Trade setup. The initial resistance/target can be the DP off of the b swing at 44 with the final target at 46.59. Obviously, today's FED meeting can be a game changer so be aware. I decided to sell puts here instead of take the trade outright. It will be interesting to see how this one plays out.
