and why there is more in store.
While Apple is the biggest tech stock out there, and its technicals are not scary, Google and Netflix have gaps. I do not recall ever seeing a gap that did not fill. This is a pretty amazing statement. If I knew enough about probablities and options I believe I could make a great deal of money from this one onservation.
But sense this isn’t a board about technical trading or options I want to discuss why we will exepeience some short term pain and long term pleasure.
Google and Netflix have grown to a large enough size that they can move indexes, and when they get symapthy moves from Apple and Amazon things really get moving. Google has a gap way down at 900 or so. This gap will fill, I am so sure of it I have a Good Till Canceled order sitting down there.
Nvidia has been on a tear. But Nvidia has a gap all the way down at 105. This would be a 30 percent drop. If you cannot stomach 30 percent in the Nvidia position you are holding, don’t hold it.
When the stocks fill these gaps we may, or may not see a cascading outflow from index funds. If we do, every Saul stock will be put on a blue light special. If you are fully invested, you will get to rebalance. If not, you will need the conviction to back up the truck to buy the companies you want.
Notice I drew a distinction between stock and companies. Traders buy stock, investors buy companies. I opened positions in Google and Nvidia above the gap, even though I have experienced 100 peecent gap fills in my life. (Bullish gap fills, bearish gap fills don’t fill when the comapany fails)
Cheers
Qazulight
12 Likes
I do not recall ever seeing a gap that did not fill.
Mostly true, but breakaway gaps are much more likely to keep running. A gap that fills in 6 or 12 months does not really count, by that time the world is so different it is useless. That stock might have given you a 20% gain while you were waiting for that gap to fill next year.
NVDA also had a gap up Nov 2016 from around $70 to $80, do you think we should wait for that to fill?
NVDA also had a gap up May 2016 in the upper $30s and Feb 2016 in the upper $20s - none of those have filled, will they, or will NVDA have a nice standard 20%-35% correction that it is due and then keep growing earnings and attracting buyers to send it higher?
8 Likes
I do not recall ever seeing a gap that did not fill.
Mostly true, but breakaway gaps are much more likely to keep running. A gap that fills in 6 or 12 months does not really count, by that time the world is so different it is useless. That stock might have given you a 20% gain while you were waiting for that gap to fill next year.
NVDA also had a gap up Nov 2016 from around $70 to $80, do you think we should wait for that to fill?
NVDA also had a gap up May 2016 in the upper $30s and Feb 2016 in the upper $20s - none of those have filled, will they, or will NVDA have a nice standard 20%-35% correction that it is due and then keep growing earnings and attracting buyers to send it higher?
Right! This is why I bought above the gap and put in a good till canceled order in the gap.
Cheers
Qazulight
Right! This is why I bought above the gap and put in a good till canceled order in the gap.
yes, that is a technical trading approach. When you get a great gap that ALSO is a breakout from a base buy it, then put your stop loss a little below the low of the breakout. I tried with with CIEN recently and was stopped out. But if you look at that chart, you can see my stop loss kicked in before the full plunge on the Friday. It has not really gotten better since, or worse - but the downside at that point was too large to hold through.
http://stockcharts.com/freecharts/gallery.html?cien