I know I'm probably just talking to myself about this arcane
stuff so most of you can skip these TA messages.
The reason I paid 68 cents for 5k today is because TWG
gapped up on the open and held the price one hour after
opening. A full gap up (the opening price was greater than
yesterday's closing price) means that there is an imbalance
in demand and supply. Because there is more demand the price
has to be increased over the previous days close. That
means there are lots of buyers out there. The reason not
to jump in and buy right away is that there could be a
small group who've been reading these boards or SH, etc.,
got enthusiastic, jumped in on the open and paid too much.
If there are a bunch of people starting to pay atttention
to a stock who don't have much experience that can often
happen. If that happens, the first burst of buying isn't
followed by more buying and the price slides. In that
situation, you might short the stock because the drop might
panic the early buyers into unloading their shares.
If, after an hour, the stock is still above its gap price
the demand has continued and that means there are a lot
of buyers out there. That's why it was no surprise to see
the volume on TWG at the end of the day. The price fell
back slightly at the end of the day. That often is day traders taking a profit. Today, a day trader could have
done quite well. The nice thing about full gaps is that they
often indicate substantial demand for the stock and,
therefore, the movement up is likely to continue for a few
days until the new buyers have the stock they want.
All of the above is said with the understanding that TWG
is a penny stock, it is moving on anticipated results,
rather than like a blue chip on business fundamentals,
and negative or positive news can instantly reverse any
trend no matter how well established. That's why we're
speculators rather than investors. My TRP or BNN.A are
investments.
Full gaps don't happen all that often. When they do, they
often provide an opportunity to ride momentum to hirer
prices as a day trader, a swing trader or a longer term
holder.
This ain't advice to buy, nor sell. It's just TA. Do your
own DD. Also, there are whole lessons on Gap trading on
the Internet. |
