SCT Issue #236
Gold is reaching an important short-term inflection point. It is still trading well below resistance back at the breakdown level of $1,130, yet it is deeply oversold and subject to a further bounce higher.
At the same time, the pressure on gold is substantial. I have been monitoring the trading virtually around the clock all week. Sellers appear almost instantaneously on rallies. The metal is trading very heavily, meaning it could just as easily collapse further, at any moment.
Therefore, I want you to be aware of the important levels I’m watching right now.
Short-term support lies at $1,098 and $1,086. If $1,086 is broken, we should see a move down to $1,072 … and if that gives way, to the $1,050 level.
Very important: I have a weekly and monthly sell signal at $1,050.40 (basis the nearby August futures contract).
Should gold close below that level tomorrow, or next Friday, the 31st, we could see gold collapse in a waterfall type of event to below $1,000 to the next key level of support at the $961.70 level.
If that signal is avoided tomorrow or next Friday, then gold could still move lower in a more gradual way, heading into the timing target I’ve previously shown you, August 4th, which should provide a low. That low would come in higher, at just above the $1,000 level.
Meanwhile, resistance to any further bounce right now lies at $1,109, followed by $1,116 and $1,128.
The bottom line is this:
A. Right now, a further bounce cannot be ruled out. But …
B. Any further bounce, if it occurs at all, should be temporary. And …
C. New lows lie ahead for all precious metals.
So what is the best strategy right now? My answer:
First, hold your newly purchased December 2015 SPDR Gold Shares 105 put options (GLD151218P00105000). These are nicely positioned and come on the heels of a 78.1% gain on the prior put option position.
Second, hold your shares in DB Gold Double Short ETN (DZZ). You are in from lower levels and the position is showing an open gain of 14.13%. Hold with a protective sell stop good-till-cancelled at $6.43.
IMPORTANT:
For subscribers who DO NOT own the above positions:
I recommend that you add them now. Though there is a risk that gold will initially go against you, as noted above, at the same time, I don’t want you to miss the potential for a further collapse.
In addition, the upside risk appears to be very limited, so adding these positions now makes perfect sense.
That said …
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If you DO NOT yet own DZZ or the December 2015 For every $25,000 you have allocated to trading this service: 1. Buy 400 shares of the DB Gold Double Short ETN, symbol DZZ, at the market. Place a good-till-cancelled protective sell stop at $6.43. 2. BUY 4 December 2015 SPDR Gold Shares put options, strike price 105, symbol GLD151218P00105000, at a price of $5.00 or better, TO OPEN. This order is good-till-cancelled. |
Hold all other positions and stay tuned …
Best wishes,
Larry
