February 16, 2009

Gapping Stocks

By Planet Wealth

In previous posts I have spoken about gapping in a stock. Stock, as a general rule, go back and fill in any price gap that has been made.

ORG gapped from $10.55 to $14.00 in May last year. After significant sideways movement with a $15.00 support holding it up, lower peaks (LP) started to form in December indication the sellers were taking control. Once it was broken the stock continued on a down trend.

A pennant has now been formed, but with no significant support in the last 10 years to help hold it up, and a large gap still to be filled from May last year. The stock has a higher probability of breaking down, than breaking up.