Where will Gold Go Next?

Here’s what we know. We’ve been up 65% on Gold (GLD) and have now sold 2/3’s of our position. Over the past year we’ve been bullish on GLD and GLD options and have made money on 8 trades. Each of them have been long, and on upside moves.

If the markets continue recovering GLD will be seen as less safe, and all charts on Gold show the same topping area.

Is it time to short gold? No, but it is time to sell out of gold by at least 2/3 of your position. While Gold has risen Blue Chip Options has made great money, and recommended 15% of our portfolios in GLD and GLD options.

We now see it near tops.

Note reversal potential begins at 90.00. Traders interested in shorting GLD should consider any At The Money GLD Sept Put Option. Buy at market when GLD closes below 90.00 down and hold until GLD drops to 82.00 to 84.00, setting a 50% stop loss.

Using the Moving Average:

Many traders use a 15 minute chart, with an exponential moving average (EMA) of 5 unites for the “fast line” and EMA of 9 or 10 for the “slow line”. This can show up to 85% of a day trade move. Good chartists couple with point and figure, or candlesticks, and MACD. If the market is flat lining consider using a 5 minute chart.

Floydian rules to the moving average are simpler. I watch a stock, or an index, for when it passes below the 200 day moving average, and where that “acts’ in relation to the lower Bollinger Band, and in relation to Fibonnaci numbers.

Moving averages are healthy tools. Each of them act as support and resistance lines.

How to use the FEAR and GREED indicator:

VIX as an indicator exists to assess whether or not the current market sentiment is bullish or bearish, all based on FEAR and GREED.

Developed by the Chicago Board Options Exchange in 1993 the CBOE Volatility Index (VIX) gauges the markets volatility.This index uses short term near the money call and put options and measures the implied volatility of the S&P500 index options over the coming month.

A level below 20 is bearish, meaning investors are more complacent. When VIX hits 30 or more it shows FEAR, which is actually bullish from a contrarian point of view.

VIX has contrary indicators within the calculation, we believe. As an example, we often see the market hit new lows during a low VIX.

This is simple indicator to add to your charting arsenal.Here’s how VIX looks on a point and figure chart, the core methodology we use for charting.