An interesting observation..
<<Let’s look at a few major catastrophes from recent months.
You can see these on your TORS software, at the Trend Trader web site
www.trendtrader.com under charts and graphs, or any quality financial site
with charting.
INKT – On June 23, 2000, INKT closed at 140 3/8. The next day INKT opened
at 122 7/16 and traded down to 113 and closed at 115 1/16. After a few days
of consolidation, INKT broke down to a low of 106 ¾ before a rally to the
140 area. The current price is 125.
IBM – On July 3, 2000, IBM gapped down. It traded for several days in that
area and then broke up filling the gap and moved higher. On September 11,
2000, IBM gapped down, however this time IBM kept moving lower and as of yet
has not filled the gap.
PG – On March 6, 2000. PG closed at 87 7/16. The next day it opened at 57.
The stock has been in a large sideways base with a current price of 63 7/8
and has yet to fill the gap.
XRX – On June 16. 2000, XRX was 25 after a long decline in prices. The next
day XRX opened down 5 points. It has never filled the gap and is currently
16 9/16.T – T on May 1, 2000 closed at 49. The next day it gapped down to 41.
Ithas never seen 49 since and is now currently trading at 29 ¾.
WCOM – This stock has had several large gap down days. On July 26, 2000 it
gapped down from 44 to 38 and never recovered. Again on September 1, WCOM
gapped down from 36 to 33. WCOM is now 29 ¾ never filling the gaps.
COST – On May 23, 2000 a drop from the close of 40 5/8 to open the next day
at 31 7/8. COST has traded in a sideways pattern and is currently 29 ¾.
MSFT – Here is one of my favorite examples. On March 31 after a steady
decline, MSFT gapped now from 106 to 90 the next morning. MSFT never
recovered above 83 and trades now at 63 ¼.
DELL – On August 10, DELL announced bad earnings and it did fill a gap over
the next couple of weeks, before dropping again.
Some other stock charts of interest to look at include LGTO in January and
March, BOL July 18, CA July 3, EDS in June, HWP on Sept 8.
The lesson here, it that gap down stocks won’t always come back. The many
times do not come back immediately.
The best way to trade a stock that gapped down is if you just bought it at
that gapped down price. Place a stop and if doesn’t recover quickly; move
on to the next trade.
Notice how most of these stocks were moving down before the big gap downday.>> |
