Take a look at what I am seeing in the Vaneck Vectors Gold (Ticker: GDX) daily chart:
I know you see it also. It is a hanging man candlestick formed on Friday.
This candlestick is formed at the top of an uptrend and could be alerting us that the uptrend may be ending.
A hanging man candle looks like a man’s (or woman’s!) legs dangling. It shows us that the stock traded lower on the interval, creating the longer lower shadow, but the buyers came back and pushed it to close near the high of the day, which you can see by the small real body.
The long lower shadow shows there is some weakness in the buying.
If I get a confirmation today of an opening price below $36, I will be looking to buy puts in the Apr23 expiration cycle.
I am choosing this expiration because I expect the down move to happen in the next few days and I do not want to pay the extra premium for the longer time frame.
Looking at the Apr23 puts there is some value to be had:
If I get the lower opening confirmation, I will buy the Apr23 36 puts for $.50-$.55, a nice, inexpensive option.
Check this out, since the stock had a breakout to the upside on Thursday, it could easily open higher.
If that is the case, I would look to buy the Apr23 36 calls for the same price range, another inexpensive choice.
There you go! Two great ideas! Let’s see where this baby opens this morning!
Thanks for Reading … See You Next Tuesday!