Today I initiated a short in Gold via the inverse ETF DGZ. Based on current market conditions, I consider this a speculative trade and am only holding it in my personal account…not for any clients.
There are many reasons I believe Gold is currently overbought, including the pattern illustrated in the below chart. Notice how a spike in the Volume (moving average) of the ETF GLD often corresponds to a change in the direction of the Price.
Recently we’re seen a huge spike in the Volume of GLD. I don’t believe this is a “breakout” but rather an example of the Retail “dumb money” jumping into a crowded trade.
Twenty-five trading sessions ago, GLD moved above its 50dma. Since then, it’s up over 9%. I believe the trade is currently overbought and thus I’m betting it will fade. Please note, this is speculative and simply my personal opinion.
As always, invest with caution.
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