This 200% Move Could Happen Regardless of What Stocks Do
This ETF could rally regardless of what stocks do.
In addition, it just moved over its 50-day moving average which indicate the beginning of its next bull run.
Check out this setup and its options that could triple or more quickly.
The ETF for Gold (GLD), has a bullish long-term and a short-term pattern.
Long-term, its correction from its February high to the recent May low represented a 50% retracement of its rally from its July 2018 low. This is a bullish pattern.
The correction also bottomed out relatively close to the 200-day moving average. This also suggests it could be a longer-term low.
Therefore, when this correction turns higher, there could be a nice long-term bull run coming.
The more immediate attractiveness of GLD is its break over the 50-day moving average. This sets up a great risk-reward swing trade in the ETF and in its options.
GLD has a tendency to move quickly, then consolidate for a while. If Monday’s gap over the 50-day average is the beginning of a thrust higher, then a good entry trigger is Monday’s high.
In other words, the buy point is a trade over $123.
If the breakout is good, then it should not trade back under the 50-day average and under support around $121.70.
As a result, a good stop is under $121.50.
A reasonable short-term target is $128 which would represent a $5 move on a trade risk of $1.50. That’s a good ratio, and with options the reward can be magnified.
GLD has a liquid options market.
The July 125 calls would likely triple in value (+200%) even if GLD rallies to $127 in the next 30 days. On the risk side, they’ll likely lose about 50% of their value if you get stopped out in the next 30 days using the $121.50 as the stop.
Finally, this trade probably has a better a probability if the stock market remains weak, but it’s not a given that GLD will remain low if stocks rally.
GLD looks ready to rally regardless of what the stock market does
Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation