Did Gold Just Experience A Price Blow-Off?
- The recent high in GLD exhibited a blow-off top, characterized by a rapid price surge to $257 followed by a sharp sell-off to $236.1.
- Our two intermediate-term sentiment indicators, the "puts to calls" ratio in GLD and the Hulbert Gold Survey, signal caution and suggest an end to the two-year bull market in GLD.
- Excessive optimism in GLD call options and bullish sentiment from gold advisors indicate the potential for lower prices; we recommend waiting for pessimism to build.
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Just as some bear markets end in selling climaxes, some bull markets end in price blow-offs. A selling climax is driven by panic selling; blow-offs are driven by panic buying and short covering.
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