Tuesday's gap down brings into gap discussion high level of subjectivity IMO. The nature of the gap and its size puts it outside the definition of common, runaway or breakaway gap. Why do I think that? Because it was the result of a huge external event not due to any kind of normal positive or negative market action or anticipation. The 3 identified gaps have identifiable criteria.
My personal identifier for this kind of event is to call it an earthquake gap. While the structure (price and chart) was badly damaged it didn't completely collapse. When looking at a daily chart Nov 14 fits breakaway gap and is .02 still from closing. Nov 20 could fit common gap criteria that filled, though some may want to call it a runaway gap. Dec 14 IMO fits runaway gap model that was followed by an exhaustion top.
Remember, that statistically 90% of gaps fill. It can take a few days, weeks, months or even sometimes years, however 90% will fill.
Given todays continued selling, shrinking volume and low close the odds of filling that 5.77-5.79 gap are growing. All analysis requires confirmation so we need additional information tomorrow and maybe first part of next week. IMO, what happens at $6, yesterdays low and if that doesn't hold then 5.79 and closing the gap is strongly in play. Still can't be definitive that gap will close or not. Is this an example of the 10% that don't fill? Yet to be determined.
These are my opinions and subjective thoughts on the application of gaps and AVXL. Wouldn't be the first time I was wrong, LOL.
Green Trades.
