One of the more fascinating Google searches flows out of typing in the search box, "The Case for Gold." I'll leave that longer-term discussion for another time because my case for Gold is the 6-12 week window directly ahead when price patterns and cycles look especially bullish. Suffice it to say that there is plenty of longer-term fundamental analysis that supports the "Gold to $3K" thesis, with $4K to $5K almost as prolific. Shorter-term is where more immediate potential option gains lay, and that is the task at hand. Gold has been rising in impulse waves from lows made in late 2015 at just above $1,000, then agan in October, 2022 from around $1,600. The most recent shorter-term low was October, 2023 at around $1,800. Recognize an annual pattern here? Major lows over the past 10 years tend to occur in the fall, from which new all time highs are made going into the following new year, then retracing back to short-term lows the following autumn. Major highs were seen in August, 2011 and again in August, 2020. Another pattern? Let's be aware of the possibility enough to get cautious at the end of this summer. For now, the trend is up and we will worry about the next August-October window toward late July, giving us at least two months of what should be a straight shot higher in Gold, GLD and its derivatives. In the charts that follow, note the Fibonacci extension tool's projections for potential targets to the upside this summer, shown in the upper right corner of the charts. I use this technique to guide option selection, both in time and strikes, especially in terms of evaluating risk:reward calculations which take into account standing 50% trailing stops. Gold Futures - Long Term - Monthly Twenty-five years of Gold price cycles suggests at a minimum, two more months of higher prices, maybe leading to a correction into October, but then followed by another leg higher thereafter. Initial Target: $2600 --> $3300. GLD - Intermediate Term The trading case for gold was made on Thursday as it broke out of its Wave 4 channel, suggesting a Wave 5 underway to new highs between 227 - 245. We bought GLD July 220C as an alternative to any Jun GLD calls left over from earlier trades, the first being the Jun $195C bought as far back as March 1st. GLD Calls Since March 1st Not all of these GLD calls would have survived a strict application of the 50% trailing stop (from Best return) rule, but the biggest wins, the two March 1st trades, did survive through expiration and with gains like 762% and 312%, taking one or two 50% losses (Apr 3 and/or Apr 19) along the way is a relatively small price to pay for the action. Based on the seasonal expectation for new highs into mid-summer, more of these massive gains should be forthcoming in the months immediately ahead. Stocks: The Big Picture Without a breakdown below key levels there is no trigger to buy new stock index puts. If the market declines next week, look for a new IWM trade, but for now the market looks as likely to go up as go down, not exactly favorable odds. IWM This pattern equally allows for a quick 20-25 point drop to below 175, or a run to make a new high above 212. If the former, we have time to get into Jun or Jul puts, if the latter, I see no play to the upside worth the risk. If IWM drops below 200 stand-by for a special alert for new puts. Key levels: 201 and then 195, increasing the risk to 175 if these levels are taken out next week.
