Hey guys, if today I am doing GLD, and showing how it could be a really cool short. Firstly, lets start with the background. So, because of all the inflationary items like stimulus checks, relief items, and other things that have helped our economy come back from a crash, it has helped commodities. This is because when the dollar becomes less valuable as there is more inflation, Gold naturally rose to combat this. Anyway, it peaked in august and has been falling since. In the end of February, it had the 200 MA cross above the 50 MA, which is the most bearish you can get, but also broke through the support. Luckily, GLD has another support level right beneath it. People are now saying that it is a good buy because it is at a really good support level, but I would say the opposite for a few reasons.
Technical Analysis: Firstly, when the stock came back up to test the resistance level which had acted as its former support, it never came above it. Keep in mind that the stock is still at the resistance level, so it is not as definite, but technically it does not look like it will break above it. Secondly, the 200 MA broke above the 50 MA and this is the most bearish it can get. Also, the 200 Moving average is sloping down, and this has not happened in over a year. The 20/50 MA are also sloping down, but they are not as important as the 200 MA. Thirdly, the RSI which to me is a measure of the buying pressure of the stock has ben moving down the last few months. Recently, it has also been hitting oversold conditions, which is also very bearish because it shows that the stock is getting weak. This proves how weak GLD is.
Fundamental Analysis: Firstly, we have rising rates that are combating the inflation rate. Secondly, as our economy improves and rates keep inching higher, our dollar will recover. When the dollar rises it is terrible for commodities because cash is getting more expensive and this is why prices fall.
Intermarket Analysis: I wanted to add this in because I thought it would be really cool. Anyways, historically the Yen is very correlated with Gold. So, if you saw my chart, the Yen had ben rising for a few months but has recently broke below support. It has been falling more and more the last couple of weeks. This shows us that the same could happen to GLD since they are so correlated.
This is all, but please like and follow. Thanks!
Technical Analysis: Firstly, when the stock came back up to test the resistance level which had acted as its former support, it never came above it. Keep in mind that the stock is still at the resistance level, so it is not as definite, but technically it does not look like it will break above it. Secondly, the 200 MA broke above the 50 MA and this is the most bearish it can get. Also, the 200 Moving average is sloping down, and this has not happened in over a year. The 20/50 MA are also sloping down, but they are not as important as the 200 MA. Thirdly, the RSI which to me is a measure of the buying pressure of the stock has ben moving down the last few months. Recently, it has also been hitting oversold conditions, which is also very bearish because it shows that the stock is getting weak. This proves how weak GLD is.
Fundamental Analysis: Firstly, we have rising rates that are combating the inflation rate. Secondly, as our economy improves and rates keep inching higher, our dollar will recover. When the dollar rises it is terrible for commodities because cash is getting more expensive and this is why prices fall.
Intermarket Analysis: I wanted to add this in because I thought it would be really cool. Anyways, historically the Yen is very correlated with Gold. So, if you saw my chart, the Yen had ben rising for a few months but has recently broke below support. It has been falling more and more the last couple of weeks. This shows us that the same could happen to GLD since they are so correlated.
This is all, but please like and follow. Thanks!