Gold has provided a number of trading opportunities in the past year. While locked in a bear market since 2011, gold has made large moves both up and down. Most recently, SPDR Gold Shares (NYSE: GLD) gained about 7% over the past two weeks. That rapid move has left GLD overbought with a 2-period RSI of 90.56. More upside is possible but additional gains should be considered an opportunity to enter short positions on the metal.
Miners confirm the potential decline in GLD. If gold is at the beginning of an intermediate-term uptrend, we would expect to see mining stocks giving buy signals. Instead, Market Vectors Gold Miners ETF (NYSE: GDX) has a PowerRatings of 2. In the past, stocks and ETFs with PowerRatings less than 3 have shown a tendency to under perform the market over the next week.
If GLD was beginning a new bull market, we would also expect to see more aggressive stocks in the sector confirming the trend. Junior miners and silver have failed to confirm the recent up move in GLD and add to the argument that GLD is due for a pullback.