Trade Idea: Short Positions When GLD Shows Strength above $123.08

10/30/2017 3:48 pm EST

Focus: COMMODITIES

Landon Whaley

Editor, Focus Market Trader

As long as GLD trades below $128.17, then consider new short positions when GLD shows strength above $123.08. Depending on entry price and how much room you want this to move, use a risk price between $124.73 and $128.17, suggests Landon Whaley of Focus Market Trader.

The SPDR Gold Trust ETF (GLD) declined 58 basis points in the week ending October 27, but still has gained 10.3% for the year.

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While 2017 has been the year of broken records for the S&P 500 Index (SPX), it’s going to also be the year I sounded like a broken record when talking about the barbarous relic.

The latest round of economic data showed the annual growth rate in durable goods orders has now accelerated for eight straight months and industrial production growth is also in an upswing. Not only that but the latest report on money being spent for capital expenditures also shows growth accelerating for consecutive months.

However, it’s not just macro data confirming economic strength, corporations are kicking butt and taking names as well.

With just over a third of S&P 500 and Nasdaq companies having reported earnings, we are seeing sales and earnings growth both accelerating from this time last year.

Sales growth is registering at an annual clip of 4.7% for the S&P and 10.4% for Nasdaq companies. On the earnings front, companies in the S&P are growing at 6.8% and Nasdaq at a whopping 36.7%.

I’m not sure how more clearly I can say it to gold bulls, but there is no way gold moves higher against a back drop of growth accelerating alongside a strong U.S. dollar and U.S. yields.


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The bottom line is the 3-headed US hydra is in full effect and is not to be trifled with.

Trade idea

As long as GLD trades below $128.17, then you can consider new short positions when GLD shows strength above $123.08. Depending on your entry price and how much room you want this trade idea to move, use a risk price between $124.73 and $128.17

Once initiated, close all open trade ideas if GLD opens, or closes, above your risk price. Your risk price “line in the sand” is that $128.17 level. If GLD trades above that price, even for a second, then promptly close all open trades.

If this short trade moves in your favor, then you could consider using the area between $119.08 and $116.23 as your spot to take profits on some or all your position.

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