Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Traders,

There is no loss of positive fundamentals for gold in this environment including:

• The Fed taking a pause from its rate hiking rates  …
• Inflation continuing to fall, which will eventually allow the Fed to cut rates
• Central banks continuing to accumulate gold 
• Lastly the supply of gold continues to deteriorate 

Here’s the thing: fundamentals have a longer term impact on the price of a commodity and in the short-term technicals and positioning dominate.

Today, we’ll look at both to determine where you should be buying GLD.

Physical Gold Charting Pattern

Physical gold has been in a nice uptrend since it hit a low just under 1640 in October 2022.

Notice the Relative Strength Index (RSI) – gold made a series of lower highs in strength, while price made new highs.

That’s a very reliable reversal pattern and after matching the high and rolling over gold has been correcting. 

When trading GLD, you want to monitor the physical gold because it trades nearly 24/7 so you get a more complete picture. 

However, this correction will ultimately be a fantastic buying opportunity and I believe we are getting close.

Let’s take a look.

GLD Option Positioning

GLD is a very liquid ETF with liquid options. 

The ETF price is heavily impacted by option positioning, and monitoring the strikes with heavy open interest can give you a huge edge in trading GLD. 

The graph below shows the GLD strikes from 177 to 192. Calls are represented in orange and puts are blue for each strike. 

The key here is notice that the 180 strike is the last strike with meaningful open interest – there aren’t many sellers below this level:

Now look at the other end of the spectrum. There’s decent open interest well beyond 190.

I don’t think GLD will drop much below $180, if at all. If you are bullish gold, then you should start dollar cost averaging in form here. 

Don’t risk more than you are willing to lose and buy longer-term call spreads or outright calls, and I’m confident by the end of the year you will be rewarded handsomely.

Live and Trade With Passion My Friends,

Griff