The Black Box

[augieboo]

BULL, I think you might find the following interesting.
It's from a web site called "The Hard Right Edge,"
(http://www.hardrightedge.com) which is the creation of Alan
Farley, author of The Master Swing Trader, (one of the
best books out there for the hard-core trader),
( http://www.traderslibrary.com/moreinfo.asp?item=11668&SID=&lc=bestsellers_homepage ),
( http://www.amazon.com/exec/obidos/tg/detail/-/0071363092/qid=1066587492/sr=8-1/ref=sr_8_1/103-388294... )


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"THE GAP PRIMER

Gaps are shock events that jolt price up or down and leave an "open window" to the last bar. Market folklore (such as the infamous "gaps get filled") seems to offer guidance, but in reality it has little value. After all, many gaps never get filled. So how can we use these one-bar wonders to make good trades and increase profits?

The first thing to do is figure out what kind of gap you're dealing with. It should fall into one of these three categories:

-- Breakaway gaps appear as markets break out into new trends, up or down.
-- Continuation gaps print about halfway through trends, when enthusiasm or fear overpowers reason.
-- Exhaustion gaps burn out trends with one last surge of emotion."

see remainder of article at http://www.hardrightedge.com/wheel/hregaps2.htm