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Gap Stock trading

 
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candlestick1
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Joined: 27 Jun 2004
Posts: 503
Location: Houston, Texas

PostPosted: Tue Oct 26, 2004 8:58 pm    Post subject: Gap Stock trading Reply with quote

One of the most powerful trading methods is using gaps in conjunction with candlestick signals. Gap stock trading provides the biggest potential for profits of any trading method. If you analyze what a gap means, it is the exuberant buying that moves the price away from the previous trading range. When you see a Candlestick buy signal at the bottom followed by a gap up the next day, buy immediately. That is exactly what you're looking for, a Candlestick buy signal at the bottom followed by exuberant buying. That indicates you are in a position where the buying pressure is very great.

The example that was our recommendation on PHM today. Yesterday formed the kickers signal, today a gap up again. You want to be buying a stock that is gapping up from a kicker signal. In this case, he gap up over the 50 day moving average, another very positive sign. Our target for this stock is now a test of the recent highs near the $63 range.[/i]
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n7kon



Joined: 09 Oct 2004
Posts: 52

PostPosted: Tue Oct 26, 2004 10:00 pm    Post subject: PHM Reply with quote

I was chatting with a friend that day trades. She puts on a short on double gap ups. She indicates that she looks for one and some times two days for the short. Have you noticed this? When I told her about CL and it was working on the second day, she shorted it at the end of the day. On this one she was correct. As a swing trader would this be an opportunity to buy in, if you missed the first two chances? Providing the Sto’s are still in good shape, or would you consider this a missed opportunity at that point? A good example of this would be PHM. I want to see if she is correct that most double gap ups such as PHM will have a small pull back and may go as deep as the open of the second day’s candle, on third day.
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candlestick1
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Joined: 27 Jun 2004
Posts: 503
Location: Houston, Texas

PostPosted: Wed Oct 27, 2004 9:54 am    Post subject: shorting gap ups Reply with quote

Too short gap ups especially at the bottom is kinda going against probabilities. A gap up at the top is a much better shorting situation.
If you remember what the definition of a gap is, it is the exuberant buying that is moving the price above the previous day's trading range.
This is a strong indication that the buyers are taking over. To try to short against it is playing against the probabilities.

There are too many other situations to short versus trying to catch a quick pullback on a strong buy signal. It is not unusual, after a strong initial up move, to see some quick profit-taking, but as we've seen in
the PHM chart, that profit-taking was very quick today.
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