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Technology Stocks : Compaq
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To: Kenya AA who wrote (65202)7/15/1999 8:36:00 PM
From: Christopher  Read Replies (1) of 97611
 
Kenya, You are right, 20 was the low. I guess I put down the close for 6/17 which was 22.50 but 20 was the low for that day. No I don't subscribe to the theory that gap ups will fill. Note that the gap is providing support. The support line by the gap is 38.88 and today's low was 39 indicating that 38.88 is functioning as support. The stock is creating a flag indicating that it is consolidating to continue its advance. In theory, it could go up another 50%. I would sell the stock if it closes below 38.50 and would buy it again if it closes at or above 39.50. This way you would cut your losses in case it turns down on you and you will ride it if it goes back up again. It is not unusual to sell a stock and buy it back. You could do it several times before the stock finally takes off or go down deep. Meanwhile you protect yourself against huge losses and still ride a good opportunity.

There are many theories about gaps but the only one that I think you can count on is support and resistance and trade accordingly.

good trading,

Christopher
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