My apologies to the board if the topic regarding ‘Gap filling’ has been exhausted (pardon the pun), but I would like to contribute to the discussion in as much as my experience and knowledge will allow. The question is: Do gaps have to be filled???. Absolutely and emphatically, NOT, gaps DO NOT have to be filled. However, Head’s post regarding ‘filling gaps’ and in particular the recent gap up, deserves some measure of credence. Why??? Here’s why. Gap filling is a phrase or term that old timer trader’s used to express the mechanics of retracement that occurs in almost every charting landscape in the market. When a security experiences a substantial run up that is fueled by news releases deemed to be good, the stock share price will inevitably encounter one or more gaps to the upside. Unfortunately, along with these volatile upswing patterns, the stock price will almost always suffer some degree of retracement, whether there is a gap or not. It is just the nature of the beast. Traders and investors want to make money, so they take advantage of the momentum and sell into the news (or gap up), thus, heavy selling equates to retracement, hence the phrase ‘filling the gap’. Simply stated, a gap is an empty space within a certain trading zone that possesses specific characteristics with regard to persistence, retracement and impact to the trend. The significance of gaps are greatly reliant on their location, associated volume and size of the gap in relation to its printed candle(extension).

So, what does this recent gap up mean for us?? What is its significance and impact to the future trend?

Here’s my take, FWIW.

(Monday, June 18- Gap day)Although the printed candle has a short extension, it clearly broke through the resistance level at .53 -.54 and has now defined, what appears to be, new resistance and support levels. The long upper and lower shadows of the candle indicate indecision during the trading session with the bulls winning in the end. The lower shadow tested the previous resistance(now the new support) level around .52, while the upper shadow tested the new resistance level at .625.

(June 19) After a sell-off and testing new support levels at .52 once again, the sp stabilized and held at the support level.

(June 20-25) The morning star long legged doji(or spinning top) triggered a buy signal which was followed by a 3 day uptrend( 2 of those days tested support once again at .52).

(June 26-28) Continuation pattern formed nicely, indicating that the short term uptrend should continue to the next level.

(June 29 my favorite) One must wonder… why the gap down to .52 in pre-market??? Whether someone bailed pre-market or the last of the warrants were converted, it doesn’t matter. What matters is, buyers controlled the entire day. The support level was once again tested and maintained for the 6th time in two weeks. A very strong close on Friday with the Marubozu candle stick defining the moment (buyers controlling the entire day from beginning to end of day).

So, does the sp retrace below new support levels at .52 and ‘fill the gap’???. I say, “Not a snowballs chance in ..oops” “Better stop there”. Prior to the gap and even after the gap, there were enough shares traded within the gap zone(.45-.57) to deter any substantial retracement back to the .40’s. For all practical purposes, there is no gap.

It’s 2 am and I’m dead tired and am now rambling on. So, I hope this post make a little sense and I apologize to the board for such a lengthy post. My last and final comments are, “It’s time to let this bull run”.

All of this and $3.00 might get you a mocha, locha, choca, lahta, hotta cup of coffee ;-)

GLTA

PxP