GLD "Baskerville" Trade
GLD (top), GLD Jan 150 P(bottom)
- On 4/42013 GLD broke through the lows established on 2/20/2013
- The support break was NOT confirmed by the options - Jan 150 P were LOWER on 4/4/2013 than 2/20/2013
- The following day 4/05/2013, GLD returned to values above the close value on 2/20/2013
This is what call the "Baskerville" setup. A a false price breakout. In general, following a false breakout price action can be quite dynamic. I already bought my position but if I did not have any longs, look for any down/flat day to get in. With only the strongest investors left long, there will be nobody left to sell and as a result any pullback can be expected to be extremely shallow.
Disclosure: I am long GLD.