Trade of the Day: Gold Shares ETF (GLD)

Advertisement

The bulls enjoyed one of their better runs of the year last week, as the indices posted their largest gains since February. The 3% gain, on average, cleared the downtrend channels  for the most part. Still, gold had a strong week following a move above the 100-day moving average and the 50-day moving average the prior week.

Gold’s bounce off of the $1,100 level earlier this month looked like a near-term low and a bottom that has held since early August. The next hurdles for gold prices are in the $1,170-$1,180 range and at the 200-day moving average.

If gold remains strong this week, take a look at the SPDR Gold Shares ETF (GLD). A run to $113 and the 200-day moving average looks like it’s within reach, and a move above this level could lead gold to make a run past $115.

The GLD November 115 calls (GLD151120C00115000) were up 46% on Friday and could run further if gold maintains its momentum, so speculative traders can buy here at current levels.

Gold prices may also depend on the S&P 500 Volatility Index ($VIX) which tested a high of 18.20 last week, but the bears failed to challenge 18.50-19 on the VIX, let alone the 20 level. The bulls held the 17.50 level on the VIX for the second-straight session, with Friday’s low touching 16.89. A drop below 15 would confirm that the October rally is real, but that level would need to hold for several sessions.

The Dow needed to hurdle 16,600-16,700 and a still-downtrending 50-day moving average to clear its upper downtrend channel and the top of its trading range. The 100-day moving average is 234 points away, or more than 1%, and is still in a downtrend. The 200-day moving average is 520 points, or roughly 3%, away from current levels, but it seems to be leveling out.

The S&P 500’s move above 2,000 and the descending 50-day moving average took care of business on its breakout to higher highs. A sloping 100-day moving average is 32 points away, or 1.5%. The 200-day moving average is a little more than 2%, or 47 points, away from being tripped, and it also seems to be leveling out.

The Nasdaq needs to take out 4,850-4,875 before it clears its upper downtrend channel and the top of the late-August trading range. Tech is 5 points away from clearing the sloping 50-day moving average and 78 points from topping the leveling 200-day moving average. The 100-day moving average is 126 points, or more than 2%, away from being cleared. I’m watching this week to see if the 100-day moving average holds above 4,950.

Meanwhile, the Russell 2000’s move above the downward-sloping 50-day moving average and the upper downtrend channel at 1,160 was a bullish sign. However, the upper trading range at 1,200 hasn’t been cleared. The still-sliding 100-day moving average is 45 points, or 4%, away, while the flattening 200-day moving average is 53 points, or nearly 5%, away from being tripped.

I’ve been telling my Momentum Options subscribers about a possible rebound to the major moving averages once the trading ranges were cleared. This week’s earnings announcements include a number of Dow blue-chips and S&P 500 companies, and their results will influence the indices as the earnings cycle continues for the next few weeks.

InvestorPlace advisor Rick Rouse is offering a special free report, “The 5 Golden Rules of Options Investing,” that reveals his rules for options trading success that will help you make double- and triple-digit profits in the months ahead no matter what the market has in store. Just click here to read it right now. 

Whether you’re new to options or have years of experience, the trading advice Rick will share can help you lock in bigger gains, find new winning ideas, wring the risk out of your trades and become a more confident and successful options investor. Click here now to download your FREE copy of The 5 Golden Rules of Options Investing.


Article printed from InvestorPlace Media, https://investorplace.com/2015/10/gold-shares-etf-gld/.

©2024 InvestorPlace Media, LLC