Big news this week … gold has triggered a TradeStops Re-Entry Rule!
Oh man, I’m so excited about this. Of course, I’m excited about this because I love gold and am itching to add to my gold holdings. But I’m also excited about how well my Re-Entry Rule strategy has worked for gold. It has saved me a ton of money!
Take a look.
Gold (via the popular SPDR Gold Shares ETF (GLD) last stopped out just above $150 back in early 2013. Since then GLD has rallied over 10% several times.
My proprietary trend indicator, the Smart Moving Average (green line on chart above) did EXACTLY what it was supposed to. It kept us out of the head fake rallies.
GLD made a low of $102 back in late 2015. Today it is trading at $118. It’s already up 16% from its low and its shot up like a rocket ship in the past month.
Am I crying in my beer over the fact that I missed out on buying GLD at $102?
I am personally thrilled to have the opportunity to buy GLD today at $118 because my system stopped me out of GLD back at $150 and it’s been holding back from buying GLD for the past 3 years.
But that all changed this week and I couldn’t be more excited. I’m able to buy GLD today at a 20% discount to where my system last stopped out at $150 … and I stayed clear of all the disappointing head fake rallies of the past three years.
Last week I wrote that gold could be in for a correction after its recent parabolic rally. I still believe that to be true. There are numerous indicators that gold needs a breather after such a rapid rise. In fact, I’ve even got a pretty good idea of exactly where I will be looking to back up the truck on GLD.
I’ll be looking to add to my gold holdings if and when GLD pulls back to about $108.
The blue circle in the chart below shows where several strong support elements are converging right around this $108 level.
The Low Risk Zone border is right there at $108. The Smart Moving Average is just below it at about $107 and the top of a rising breakout wedge (gray dashed lines) is sitting right above the Low Risk Zone border at $109.
Don’t let the fact that gold could be in for a pullback stop you from making sure that you’ve got some gold in your pocket today. Gold has officially triggered a Re-Entry Rule for the first time in over three years … and we’re not the only ones that know that gold is one of the big plays for 2016.
But look for gold to take a breather here soon.
I’ll be adding a Low Risk Zone alert on GLD to my own TradeStops account. If I see GLD pull back to the top of its Low Risk Zone, I may just be backing up the truck.
Richard M. Smith, PhD