Page 323 - THE MARKET WHISPERER

THE MARKET WHISPERER 31 9
Closing the Gap, BBBY

In this chart, we see the gap up for BBBY which closed its prior day of
trading at $46.03 [1] and opens the second day at $46.22 [2]. Notice how

it dropped and closed the gap within just fifteen minutes. The point where
the gap closed [1] is the point where institutional traders ceased selling

and the stock receives the “green light” to keep trending up. Remember
that 80% of the gaps close on the day of trading itself, and over 90% close

within ten days!

Never Chase Gaps

Let us say you decided prior to trade that you wish to buy BBBY if it goes
higher than $46.3. You check at the start of trading and find it opens with a
gap up, and in just a few more cents it is likely to reach your trigger price.

Looking wonderful! Should you buy?

At this point, an alarm should sound in your mind. Remember the
saying: “We never chase gaps!” Even if your heart says “buy,” the hours of

study we’ve spent together should be enough to loudly ring “stop!” Why?
Because the chances are high that the gap will close.

SMART Do you want to buy a stock? Not if it opened with a gap up.
MONEY Remember: we never chase gaps