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Strategies & Market Trends : Trend Setters and Range Riders -- Ignore unavailable to you. Want to Upgrade?

To: RKHIII who wrote (12844)	2/26/2002 10:48:19 PM
From: Susan G	Read Replies (1) \| Respond to of 26752

Gaps are always resistance from below and support from above... And everyone who ever taught me to trade taught me that and I've learned it from experience. There is sometimes the exception though, where they blast right through, Usually they are magnets but then filling them can take a few attempts. There is always at least a pause and a pullback when testing a gap from underneath. And then usually another pause as it fills it totally and hits the top. The S&P had a gap until it filled yesterday, and it took 4 or more tries - over a period of several days. When it filled, that started the rally yesterday. One positive about today is market breadth on the DOW was good...the nas was just slightly positive, but there were more highs than lows. And if we do fill that gap, which is from 1791.01 to 1801.97 that could spark a good rally... As well as something Greenspan may utter tomorrow, if he speaks the words the market wants to hear, it could be up up and away! And reverse those bearish charts totally. The market direction here depends on his words tomorrow, that will be the deciding factor I'm sure. If he sees recovery, we will definitely rally. But if he is too cautious, watch out!

To: RKHIII who wrote (12844)	2/27/2002 9:53:11 PM
From: Susan G	Respond to of 26752

RK, here is a chart that illustrates clearly what I meant by "gap resistance". They say a picture is worth a thousand words <g> This explains it better than anything. This also shows the rising wedge which broke down around lunch time. home.earthlink.net The horizontal line is the beginning of the gap, you can see how it did a false breakout of the downtrend line from the January high, a major bulltrap as people saw it as a breakout, but after 6 or 7 attempts to break into that gap and fill and hold it, it just gave up and collapsed. Eventually it will break through it, but they rarely do on the first attempt. Especially with so much other resistance in the same spot - the downtrend line from January highs, which was broken but was a big bulltrap/false breakout, and if you look at another time frame, the 30 min, all this resistance hit in the exact same spot as the 200 MA. Which is tough resistance on any time frame... home.earthlink.net There is now gap SUPPORT at 1366, from that little gap up on 2/25 which was tested once and held at exactly 1366. So it may act as support tomorrow to stop another down move. But since they are like magnets, it also may be filled. But better now than later!