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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.95

+1.2%

Dec 18 3:59 PM EST

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To: mary_a who wrote (59938)	6/24/2002 10:02:54 PM
From: rkral	Read Replies (1) of 77400

This from the generally accepted fathers of technical analysis. "From the earliest days of stock charting, gaps attracted attention. These "holes" in the price trend graph were conspicuous. It was only natural that observers should attach importance to them, should try to assign some special significance to their occurrence. But the result was unfortunate, for there soon accumulated a welter of "rules" for their interpretation, some of which have acquired an almost religious force and are cited by the superficial chart reader with little understanding as to why they work when they work (and, of course, as is always the case with any superstition, an utter disregard of those instances where they don't work)." ....... "The most common superstition is that "a gap must be closed." ....... "Must a gap be closed before prices move very far away from it? Certainly not! Will it be closed eventually? Probably yes. If it is not closed by the next Minor reaction, there is a chance it will be covered by the next Intermediate retracement, and if not then, pretty surely by the next great Major swing in the opposite trend. But that may be years later -- hardly a matter of interest to the ordinary trader." Maybe you should read chapter XII of their book some time. "Technical Analysis of Stock Trends", Edwards & Magee. You wouldn't then be citing a five year old gap, imho. Ron

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