“Gaps get filled” is the passed-down wisdom from stock market technical analysts who closely study price chart patterns with eyes for potentially profitable trades.
A gap is the space on a chart where no prices were filled. This is often the result of unexpected news which leads investors to buy or sell with enough sudden ferocity that certain price levels are skipped and left behind.
When the emotion behind the suddenness of the unexpected dissipates, sharp traders sense opportunity and may target the gap area as a place to harvest profits. As reason and thoughtful behavior take hold again, price action may tend to come back to the empty spaces that appear on price charts.
5 Big NYSE Stocks With Big Gaps.
Archer Daniels MidlandADM
.
The 50-day moving average crossed below the 200-day moving average in October 2023, almost as a warning signal for the price action to come. That mid-January gap down is confirmed by the extraordinary level of volume that accompanied it. Price movement in February remains inside that big red bar that followed the gap down.
AmazonAMZN
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The gap up at the beginning of February represents the spectacular buying that comes with being a big cap Nasdaq 100 favorite. Most stocks in the index are having trouble with gaining much upside but Amazon keeps attracting hot money chasing the “AI” theme.
Meta PlatformsFB
.
Same basic concept here as with the Jeff Bezos creation, only more so. Meta CEO is building an underground bunker at his Hawaiian estate, but investors are not viewing his end-of-the-world preparations as anything out of the ordinary. The early February gap up comes on much heavier than usual volume — hot money finds a home.
Snap.
Analysts expected good, Snap delivered not good and the stock gaps down, mightily. Huge volume and a drop to below both the 50 and 200-day moving averages all at once. Note that the slide fills 3 previous smaller-sized gaps up from November through December 2023.
United Parcel ServiceUPS
.
Not as bad as Snap’s gap down, but not much fun for shareholders. With the drop, UPS now trades below both the down trending 50-day and the down trending 200-day moving averages. It’s a positive, perhaps, that at least the February 2024 low came in above the late October 2023 low.
Charts courtesy of stockcharts.com.
Additional analysis and commentary at johnnavin.substack.com.
