Posts Tagged ‘trading gap patterns’

Playing the Gap: Identifying and Trading Gaps

Playing the Gap: Identifying and Trading Gaps

Courtesy of Pharmboy

Gaps are very profitable technical indicators.  A gap is an area on a chart where no trades take place and these are caused by fundamental or technical events that usually occur after the market closes and before the market opens, also known as ‘non-regular trading hours’ (NRTH’s).  There are four basic gap types:  area, continuation, breakaway and exhaustion.

Gaps are significant for many reasons:

  1. Gaps tell traders that something occurred during NRTH’s.  Typical events include: earnings announcements, FDA approvals, analyst upgrades/downgrades, company press releases and other significant events that may cause investors and traders to place orders to buy or sell during NRTH’s, causing an order imbalance.
  2. The type of gap will help you determine the probability of the stock’s direction in the short and intermediate term.
  3. Gaps are profitable.  Traders can take advantage of the imbalance of orders by either “catching the momentum” or “fading the gap”.  When riding a gap, the traders are betting that the stock will continue in the direction it gapped.  When a trader fades a gap, they are betting that the gap will “fill” and move opposite of the gap’s opening direction.

Types of Gaps

Area Gaps

Area gaps are usually small and unimportant.  They are also referred to as “common gaps” because they occur so frequently.  Characteristics of area gaps are that they are fill very quickly. When the word “fill” is used, traders are referring to the gap’s closure.  The gaps usually occur in trading ranges and they form on very low volume.  Because of the low buying volume of the stock, the gap cannot sustain itself, thus filling relatively quickly. 

The easiest way to determine if a gap will fill is to watch the first 30 minutes of the day.  If the candlesticks appear to be fading in the opposite direction, it’s very difficult to stop it.  This is because many others see the same fade and will jump on board.  Remember, a gap does not have to fill on the same day of the gap.  These types of gaps are unpredictable and are hard to trade.  Figure 59 an example of an area gap.

Figure 59.  Area gap.

Continuation Gaps

Continuation gaps are extremely important because they “continue” a trend.  They are also known as “runaway” or “measuring” gaps and they do not fill quickly.  These…
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Zero Hedge

Elemetal Gold Tries to Cover its Tracks, and Why Isn't Gold higher - Update 1

Courtesy of ZeroHedge. View original post here.

What Does Elemetal Imply for Precious Metals?
  • Gold smuggling accounts for up to 75% of all LATAM Gold imported in the US
  • Disruption of this augmented Gold supply is Bullish for Gold
  • Elemetal is running for corporate cover
  • No-one cares

UPDATE 1 - DGSE a publicly traded retailer, just signed an LOI to buy Elemetal, LLC. It gets better. DGSE is #2 on the S&P list of likely retailers to default. Wait, there's more.  Elemetal is actually majority shareholder in DGSE.  Essentially, Elemetal, which controls DGSE would rather ...



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Phil's Favorites

World Bank Maintains Oil Price Forecast At $55

 

World Bank Maintains Oil Price Forecast At $55

Courtesy of Irina Slav, OilPrice.com

In its latest Commodity Markets Outlook, the World Bank maintained its Q1 forecast for oil prices at $55 a barrel, saying, however, that overall energy prices will increase 26 percent in 2017.

The WB is overall optimistic for oil, expecting supply to tighten in the current quarter as OPEC and non-OPEC production cuts start to affect global supply. In that, the institution differs from some energy analysts who are markedly bearish on oil prices. ...



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ValueWalk

Charlie Munger On The "Thrift" Crisis

By Rupert Hargreaves. Originally published at ValueWalk.

Charlie Munger is known for speaking the truth. Indeed, some might say he has built his reputation on it. By speaking the truth and trusting his instincts, Munger has not only built a reputation for himself, but he has also helped Warren Buffett and Berkshire Hathaway avoid a number of disasters, which they may have otherwise been dragged into. One such disaster was the mutual savings and loan association crisis of the 1980s and 1990s, which Berkshire Hathaway and Wesco Financial managed to avoid with Munger and Buffett at the helm.

]]> Get The Full Series i...

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Digital Currencies

Bitcoin Spikes To Record Highs

Courtesy of ZeroHedge. View original post here.

US dollar prices for virtual currencies are soaring. Both Bitcoin ($1343 highs) and Ethereum (as we described previously) are at new record highs as China regulators/exchanges appear to have 'stabilized', fears over the so-called 'hard fork' have abated, and hopes for an ETF have been revived by an SEC review.

Back above the price of gold and at record highs, Bitcoin rallied notably overnight after China's largest bitcoin exchanges introduced a flat 0.2% fee on eac...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Euro-Area Economic Confidence Surges to Highest in a Decade (Bloomberg)

Euro-area economic confidence jumped to the highest in almost a decade this month, a testament to a continued improvement that may soon prompt a policy shift at the European Central Bank.

European Bank Bulls Seek ECB Tapering Hints as France Risk Fades (Bloomberg)

Investors are waiting to see whether Mario Draghi joins in the optimism that has engulfed the region&r...



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Chart School

Markets Consolidate

Courtesy of Declan.

After two days of gains it was time for consolidation in markets. The Russell 2000 didn't get this memo and added a third day of gains managing a new closing high.


The S&P finished with a doji which tagged all-time high resistance. Technicals haven't changed from yesterday and relative performance has continued to weaken. The index just has to survive profit-taking and perhaps aggressive shorts looking to take advantage of the resistance tag.

...

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Kimble Charting Solutions

S&P 500; Dangerous place to run out of gas!

Courtesy of Chris Kimble.

Could the “Weekly Closing Highs and Lows” of last year, be impacting stock prices in 2017? The Power of the Pattern thinks so! Below looks at the S&P 500 over the past couple of years. where we applied Fibonacci to the “Weekly Closing Highs and Lows” of last year.

CLICK ON CHART TO ENLARGE

The S&P 500 ran into the 161% extension level at (2) and it stopped on a dime, at the end of February. Following a small decline the rally the past two weeks has it testi...



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OpTrader

Swing trading portfolio - week of April 24th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Members' Corner

Should I buy that stock?

Courtesy of Phil Stasukaitis (pstas)

I was asked by my local investment club to do a presentation on "how to buy a stock?" As I pondered the question, I began by noting all the elements that I monitor regularly and which come in to play as part of my decision process. As the group is comprised novices to experts, I tried to gear my discussion to cover both basics and more advanced concepts.

Four Part Discussion

  1. Macro Economic Indicators
  2. Market Indexes
  3. Fundamental Analysis
  4. Technical Analysis

1. Macro Economic Indicators

We'll start with reviewing some basic concepts and measurements that have direct effects on the stock market. 

A. Gross Domestic Product (GDP)

...

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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Biotech

CAR-T & CRISPR - the Future is Now

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members....it has been a while since my last post, but since many have all been on the board following the chat, it is time for a scientific lesson in a few of the companies we are long.  In addition, another revolution is coming in the medical field, and it will be touched upon as well.

CAR-T - stands for Chimeric antigen receptors (CARs) and the T is for T-cell.  

From the picture above, T-cells are one cell type of our immune system that fight off infection as well as they are one player at keeping rogue cells from becoming cancerous. Unfortunately, cancer somehow evades the immune system and so it begins.

CAR-T came along in the late1980s via a brilliant scientist, Zelig Eshhar...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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