5 Big Stocks to Trade for Gains

SPDR Gold Trust

Gold has lost some of its glimmer in the last few months, as a pullback from all-time highs made goldbugs question how much higher their favorite metal could go. But a bullish setup in the SPDR Gold Trust (GLD) could mean significant upside for gold prices in the next few months. Here's how.

GLD is currently forming an inverse head and shoulders pattern, a setup that indicates exhaustion among sellers. The buy signal comes when GLD breaks out above the pattern's neckline, currently right around $172.50. Bear in mind that this is a very long-term pattern (it's been forming since September) - so it's crucial not to be early on this trade. While waiting means giving up some potential gains on this trade, it also means avoiding the vast majority of risk.

Even though the head-and-shoulders (and its inverse) is likely the most well known technical pattern, it's still a valuable one: an academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits [that] would have been both statistically and economically significant." That's a good reason to keep an eye on gold prices in 2012.

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