Today I added a few shares of GLD into my portfolio as Gold suffered a huge sell off. As I wrote in my previous post I believe the today’s price action is an overreaction of investors, most likely responding to (outdated) report from Sorros Fund Management.
As I wrote I believe GLD indicated a bearish exhaustion as is due for reversal. Let’s take a look at charts:
First take a look at 5 year chart, which nicely shows the new support line formed in October 2011.
The red horizontal line indicates the support at which I originally placed a trigger buy order ($151.60 a share) and honestly I haven’t expected the price ever touch this level again.
Following is the 6 months daily chart:
In this chart you can see a very extended bearish candle and trippled volume. In my opinion this is a bearish exhaustion and we may experience a rebound. This price action also triggered my buy order today and I added shares to my portfolio.
02/20/2013 14:05:43 Bought 6 GLD @ 151.6
This trade lowers my cost basis in GLD from $164 a share to $160 a share.
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Marvin, it is my goal with Gold as well to save enough cash and have at least 100 shares of GLD so I can sell puts and calls and have it secured by cash or stock. Not much comfortable selling naked.
I believe the gold correction is an overreaction as well. I recently opened up a position selling a put of a gold mining company.