The Profitable Way To Fade A Gap

  • July 22, 2004
  • Tsutae Kamada

Watch out when strong
uptrending stocks gap down.

11:05:51

Daily Setup Alert

After bouncing from the rising trendline, Apache (APA) is piercing into
yesterday’s bar and trying to resume its uptrend. APA is trading at 45.76, up
0.35.

Following yesterday’s bearish bar, APA gapped down at the open. But supported by
the rising moving average and the trendline, the issue quickly reversed and
filled the gap.

Now let’s study the 5-minute chart. As you can see, the stock provided us three
entry opportunities. The first one appeared shortly after the opening bell.
Around 10:30 A.M., the stock gave us a 1-2-3 bottom buy signal. The last one was
shortly after 11 A.M. when the issue penetrated into yesterday’s real body.

Watch closely when strong stocks gap down.

T.Kamada