Thursday, May 15, 2014

Filling the gap

Oops... I neglected to mention one other Wall Street trading mentality: filling the gap. There is a belief among traders that any gap "must" be filled before a further advance. The NASDAQ open at 4,121 on Monday was a gap of 50 points above the closing level of 4,171 on Friday, so... traders will feel an obligation to trade down through that entire gap range before they will "permit" NASDAQ to rise further.
 
That's all just short-term trading lore, so it really doesn't mean much for serious, long-term investors.
 
-- Jack Krupansky

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