A Golden Opportunity?

This sector doesn't have a friend in the world. It used to have many friends. I'm talking about gold, and I used to be one of its friends. In the past, it has treated me very well. And it most likely will again, sometime in the future.

Focusing on GLD, the SPDR Gold Shares ETF, the 44% drop since mid-2011 looks discouraging. But the price of gold, the tradable securities representing it, and the stocks of companies that mine and sell gold, typically cycle regularly and provide ample opportunities for short-term trading, regardless of the longer-term direction.

At first, a glance at the chart of GLD shows a ‘get out of my way, I'm going down' attitude.

But let's overlay volatility bands onto the chart. Bollinger Bands expand and compress according to the recent volatility of the stock. And right now, the bands on GLD's chart are showing another compression. Bollinger Band compressions on GLD's chart are usually followed by big moves.

One interesting thing about the current compression is the timing. While the GLD security has been in existence for only 11 years, it has an interesting track record for the next several weeks. Over the next 9 weeks, GLD has risen an average 4.2%, with only one loss in the past 11 years:

Concentrating on just the next 8 weeks, the average gain per year is higher, but there were two years of losses. However, 6 out of the 11 years produced gains of 6% or more, and the two losses were less than 5%.

Going back to the daily chart, I see support around the 100 level. So if I was going to trade this ETF, I might pick a stop-loss just below 100, say 99.9.

In looking over a longer-term daily chart, I see that breakouts from previous compressions typically produce 5% to 10% moves. I'm picking a current target around 110, which happens to coincide with GLD's 200-day moving average – a possible area of resistance.

So I see a trade where I could trade a compression breakout in GLD, risking 3.1% (the distance from the current price to a 99.9 stop-loss), and potentially gaining 6.7% (the distance from the current price to my short-term target of 110). This is a Reward-to-Risk ratio of 2.2.

If I felt the price of gold and GLD, the ETF closely following the price of gold, were more likely to rise than fall over the next several weeks, the Bollinger Band compression and the seasonal chart track record make this trade worth considering.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

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Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

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MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.


This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.


The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.


The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.