BOCX opened significantly up or down.
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Alert Message
This company opened significantly up or down.
Alert Definition
When a stock’s first price in the morning is higher than the previous day’s high, traders say it has "gapped up". Likewise, when the first price in the morning is lower than the previous day’s low, traders say it has "gapped down". If a rising stock’s price stays above the previous day’s entire high-low range - or a falling stock’s price stays below the previous day’s high-low range -- then traders say it experienced a "gap day".
Why do gaps up and down occur? Consider that trading at all times is a battle between sellers and buyers, or bears and bulls. Gaps up typically occur when positive news breaks after hours, and frustrated bears throw in the towel. There is temporarily an imbalance between the supply and demand of the stock, and sellers demand extra incentive to let go of their shares. Also, traders who are "shorting" a stock in the mistaken belief that it will be heading down must quickly buy to cover their bearish bet. Likewise, gaps down typically occur when negative news break after hours, and frustrated bulls throw in the towel. The demand-supply imbalance is resolved in favor of bears, and prices move dramatically lower than the previous day’s range.
Very often, gap days lead to subsequent, explosive moves in the same direction. A gap up will often lead to a rally to the next resistance level", or a price at which there is a large supply of owners willing to unload their shares. Likewise, a gap down will often lead to a sharp decline to the next support level", or a price at which there are owners who will defend the stock by buying it.
By themselves, gaps are not reasons to buy or sell a stock. They are just one clue to the psychology of trading in the security that investors should understand before taking any action.
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