Gold, a month end report
GLD - our sell signal on 5/17
ended our buy signal of 3/24, which gave us a 24% profit. We
also added to our shorts today (5/31), and we shall exit on a
violation of resistance, which places our current risk at 2%.
GLD is at a critical point, a break of support at $64 and we will see a downside price target of $56, which is also the 200ema support where we may get a chance at a buy signal.
The price action in May is the first time we see a "grenade" since this bull market began. A grenade or hammer as others call it often indicates a trend reversal when it appears after a parabolic rise. Of course, bulls do not accept the parabolic nature of the recent upside explosion, to them, the perpendicular rise could last indefinitely. There is no doubt that gold is in a long term bull market, as the bull cross on a monthly chart has very bullish implications. However, prices often correct to the 50 or 200ema at some time after a bull cross, where it will provide a great entry for the next bull leg up.
Back to GLD, and let's look at the monthly volume. For every buyer there must be a seller. May's unprecedented volume indicates a tremendous amount of transactions took place. Using pure common sense, given a choice, would you rather be the seller, or the buyer?