October 17, 2014
I hate gaps, and the markets are set to break away with a pretty large GAP this morning. When markets GAP Higher at the open, they can do a number of things from there, and THATS why I hate gaps. I had a large number of buying opportunities in my sights for you. If you look at the “Comments” section from yesterdays report, BANIMAL asked me about what I was seeing, and I told him that I was seeing reversals across the board, and was planning on sharing my thoughts. GAPS tend to change that, so from here…Lets review some Charts
On OCT 15 – I thought we made capitulation Lows and TWEETED the following charts (Do you follow me on Twitter?)
Click here , then look for “Download & click it. Click “OPEN” and when you hear me…hit the back button (Get back to the this website & follow charts below)
Also notice the following 3 charts , adding weight to the idea that we were at capitulation lows…
SPX trend line & normal 10% correction
QQQ Trend line & Oversold
IWM – Strong reversal & high volume lows
SO, with that we look at possible buy opportunities and Yesterdays report was all about ENERGY set ups and Buying opportunities , also pointing out the SOX index and COAL stocks ….it was beginning to look like plenty of opportunities were popping up everywhere. WE WERE SET TO GAP DOWN- SO I mentioned that GAPPING DOWN could lead to a good entry. For example
SD – chart 1 = I said Buy near $4 was A GIFT – it went there and reversed
SD Yesterday – Gaps down, tags trend line & reverses higher $4.02 to $4.57
I loved this DQ chart, because DQ runs like its on fire. I said “You can BUY IT HERE (at the open) , or wait for a break above the 200sma”
DQ yesterday ( No gap & its up 11%)
ACI _ I pointed out how many things that volume pattern meant to me. Strong buy really
ACI the following day up 20% with NO GAP! ( See ANR , WLT, too)
MANY others it was the same happy success story. The selling ended Now the dilemma is HUGE GAP UP this a.m. (Audio explains)
So lets review just a couple of ideas I was looking at anyways, since I saw MANY BUY OPPORTUNITIES yesterday . (Audio explains them)
SUMMARY: We have what looks to be a large GAP OPEN in the markets today. I hope you entered some positions yesterday. If not, we MIGHT MIGHT MIGHT GAP open, sell off into lunch, and then rally back at the end of the day, last chance to enter positions? Or this may be a break away gap…Gapping open and running higher quite fast as shorts cover positions. What can you do if THAT happens? Well, maybe just sit back in your gazebo with a large glass of Ice Tea (Or preferred beverage) and watch the events unfold. Think about the psychology :
1. If you buy a GAP OPEN and it pulls back all morning until lunch, closing that gap, can you stand it?
2. If you buy a GAP open and that gap fills next week…will you sell for profit, or ride it down and in fear, bail out and watch it gap fill and reverse higher leaving you behind?
ONLY YOU KNOW Your trading personality, Risk management , and so on….so that is a tough choice. Its a Tough decision. Its why….I HATE GAPS!
Best wishes to you all!
P.S. I leave you with the CHART OF THE WEEK