up-n-up
10 posts
msg #42799
- Ignore up-n-up |
4/7/2006 9:19:47 AM
The question is basic, but I figure this is a good place to learn.
BBSE has been trading flat throught the day, then gaps up. What causes a stock to act like this? What puzzles me is that this has been going on more or less for the last 6 days. Granted there is a some directional movement througout the trading day, but it is mostly slight. Then the next day, gap up?!?! Due diligence cannot turn up any reason for these daily gaps.
Up
Show stocks where close is between 3 and .3
and average volume(10)is above 500000
and close is greater than open
and open is greater than close 1 day ago
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EWZuber
1,373 posts
msg #42806
- Ignore EWZuber |
4/7/2006 3:48:21 PM
up-n-up, for the most part gaps are manipulated by big money. You and I could cause a gap but it would most likely immediately fail.
One reason gaps are used it to let big money cash out at a higher price immediately. Particularly if there has been a large amount of overhead supply that they can't get it through.
Big money lays out a block 'stop/limit buy' at a price above the close.
Often times this gap opens right at resistance. This is usually a giveaway that this is a sucker play and it is heading lower. Big Money feeds just enough on the ask side initially to get the retail traders excited into buying the gap and then Big Money turns and begins to sell into the artificially generated strength.
Gaps can also be used to move above stubborn resistance like a moving average.
Gaps down often open at some kind of support level, a long term MA or Trend line.
I suspect gaps down are caused by market makers just dropping the ask until it finds bidders.
Does this help?
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up-n-up
10 posts
msg #42810
- Ignore up-n-up |
4/7/2006 5:44:04 PM
EW Zuber, this helps immensely.
BBSE Gapped up again today, from 1.85 to 1.91, then crashed to 1.61. I, thankfully, Stopped out at 1.82 for a quick 6% gain for 2 days. Resistance was set on Feb28 at 1.90's. Today must have been the sucker play day. If what you say is true, that big money is holding the price, should I be able to see this in a level II screen?
The big money gap up sounds dangerous. What usually happens after a sucker play?
Up-n-up
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