Gold GLD due for a decline

Gold looks like its ready for a decline here. There is a bearish divergence between gold stocks and the commodity , typically stocks lead the commodity. The gold stocks ala index HUI are giving us an early warning signal with a break in the uptrend line on April 11^th and a series of lower highs and lower lows after the break of uptrend.

See picture below, you can see that in the past several months gold stocks gave an early warning signal by breaking prior uptrend lines before a decline in gold the commodity. The top pane is the HUI index which tracks gold stocks and the bottom pane is gold futures prices. If you don’t trade futures GLD is an ETF that tracks the commodity.

Another bearish influence to keep in mind is that seasonally gold declines from mid May to mid August. More specifically if you had shorted gold on the 96^th trade day of year then covered in 60 trading you would have made money on 27 out of 36 years a 75% win rate. Today is the 80^th trade day of year, the 96^th trade day of year will be on May 19^th. The smart money Commercial traders are bearish and sentiment is too bullish.

The performance report below is based on shorting 1 contract of gold on the 96^th TDOY and covering in 60 trade days , since 1975.

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