• Chart of the Day: SPDR Gold Shares (GLD)

    by  • January 4, 2013 1:39 pm • Charts to Watch, Tony Venosa's Chart of the Day

    Today’s chart is of SPDR Gold Shares (GLD) which seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets.

    Chart of the Day: SPDR Gold Shares (GLD)

    What I Am Looking At:

    • Year-over-Year return +1.8 percent, possible support from the 0 percent level
    • Short-term trend is currently down as depicted from the blue channel in the chart above
    • Longer-term consolidation zone between $150 and $175 (not shown)
    • May-October 2012 up-move completed a Fibonacci retracement of 61.8 percent
    • Coinciding support from the June-July highs
    • Volume-by-Price indicating support area between $159-161
    • Short interest has increased 27 percent since October peak
    • 5 percent of the float is sold short
    • Peak put open interest for the January series resides at the 160-strike which could be supportive
    • The current 10-day buy-to-open put/call ratio ranks in the 90th percentile of all readings taken during the past year, which suggests a healthy amount of pessimism among option players
    • 30-day implied volatility is low, ranking in the 10th percentile

    Strategy:  Long trade could be established at current level with a stop below June-July high near $157.  If this level breaks look for GLD to eventually fall to the May 2012 lows.

    About

    Tony Venosa, CMT is a Senior Options Strategist and works on the trading desk at Schaeffer’s Investment Research. He joined Schaeffer’s in 2010. He has worked in the finance industry for over 15 years. He began his career as a trading assistant in Chicago on the floor of the Chicago Mercantile Exchange. He later moved upstairs and worked as a commodities broker on both the retail and hedging side. He left the brokerage industry to begin his trading career as a proprietary equities trader at a Chicago firm. In 2000, Tony moved backed to his hometown and continued trading his personal account. He later went on to earn his Chartered Market Technician designation. He earned a B.S. in Finance from Miami University. Tony’s main focus is short-term directional option trading.

    http://www.schaeffersresearch.com/

    • akabeachguy

      Looking at a monthly chart of GLD, I see $154.65 give or take as a very high probability entry. Tested and held that level June, July and August 2012 as well as Jan of that year as well. Same chart shows three months in a row at the end of 2012 starting in October with lower highs and lower lows. Jan of this year following suit with a lower high and lower low to date. Time to be patient IMHO.

      • akabeachguy

        Now see you are more into short-term directional trading so monthly chart may not come into your view all that much. That said, I see no sign that the direction of GLD is ready to pull a U-ey just yet.