Gaps

[Lefty62151]

Now that we have seen the failure of that breakout, I would be looking for a test of the opening range in the closing hour. This is very common for the S&P market.

One thing that should be mentioned is the effect of programs on a thin market. I look at the $Ticki to monitor these programs. If you use this indicator be aware that it updates on a cycle. If the program hits "in between" the indicator updates, you will miss the program (of course you will see the move, but you won't know why until it is too late). Just now at 3:05pm, we saw a good size program hit the market, moving it from 1208.25 up to 1209.75 right away. One of the interesting things that goes on with these programs is what I call "Star Wars". Specifically, these programs are designed to piggyback each other, one buying and then one "seeing" the volume, and selling it back down.

 

[Tradefox]

Lefty / Samson

Good job both of you!

I wouldn't want to be on the other end if you guys actually worked together ... lol

 

[cwb1014]

Quote from Lefty62151:

PM me for a resource that you can use to learn more about gap trading. I will be glad to help you get on the right track.

Can't PM you (no PM info listed in your profile) and can't email you (tried, but was told you've elected not to receive emails from within the board). Was wondering if you'd be good enough to let us know about the "resource that you can use to learn more about gap trading".

Many thanks in advance.

 

[PetaDollar]

For the original poster and others interested in trading gaps in stocks, a great starting place is Bulkowski's "Encyclopedia of Chart Patterns". Once again, the title is a misnomer. It should really be called "Simple statistical Technical Analysis of Chart Patterns with Applications to Trading". Newbs should copy the way he does his research as a starting point.

 

[murray t turtle]

John/jgad;
Not a substitute for doing you own research;
but more often than not large gaps up will close down [''fill''],
that is a gap from yesterdays close to opening price .

A somewhat typical gap up /close down in price;
TOL, gap up/close down in price.[6-17-2005]

Not a prediction;
hope this helps.

Quote from Spydertrader:

existent Gap

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=768642>

:

 

[PeterF]

Quote from murray t turtle:


but more often than not large gaps up will close down [''fill''],

Very true, however newbs should beware that you can't tell beforehand how long it will take and what happens between then and now, of course. In hindsight, gaps are classified as "Exhaustion" or "Continuation/Breakaway".

In Bulkowski's book, he has some great statistics: Exhaustion gaps usually fill within a week, while 90% of Continuation gaps take something like 3 months to fill.

Examples of gaps to new highs in trades I have been in recently: MAGS last year, which turned out to be of the continuation variety, and went up in price like 4-5X before it recently came ALL the way back down. Comapre this to COP, which gapped to new highs last week, but filled the gap this week.