Wednesday, February 07, 2007
Trading Education
Tutorial
Measured and Exhaustion Gaps
Identifiable Patterns After Confirmation Move
We have previously mentioned the three types of gaps that are of
relevance to investors - the breakaway gap, the measured (or continuation) gap,
and the exhaustion gap. We previously discussed the breakaway gap, but it is
important to discuss the measured gap and exhaustion gap at the same time. Why?
Because it is difficult to tell one from the other until after the fact.
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NASDAQ Chart of the Day
OSTK
got a huge upside break from a tightly-wound triangle range at 16.00, which
sparked big strength to the upside. Look for more strength from this stock,
especially if it continues to hold above 16.00.
Daily Trading Signals
NYSE Chart of the Day
WMI
is holding at a major resistance level at 38.70, which has held firmly since
May of last year. If the stock cannot rise above this zone, we will likely see
a big downside push away from it. Watch 37.50 for early signs of weakness.
Daily Trading Signals
Daily Market Commentary
Updated Tuesday, 2/6 for Wednesday's market.
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Key DOW Levels for 2/7
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P
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Above 12,700
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DN
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Below 12,620
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Consolidating...
- Dow trades sideways throughout session, builds out clear range.
The index closed the day with a 5 point gain, but is clearly gearing up for a
big breakout from this consolidation pattern.
- The NASDAQ led the market lower to begin the day, but eventually rebounded to
the Close. The S&P continues to build out a clear range that will surely
factor into direction.
Summary
The Dow continues to build out within the boundaries of the clear rectangle
consolidation, which could spark the next big move. Watch 12,620 and 12,685 for
early direction.
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