Fannie Mae-No Politics (FNMA)

[tetondon]

Given any price point, on any random stock, most will see lower AND higher prices following it. Even if it takes years. When that price point is a gap, people have extrapolated this observation to mean that gaps usually fill. So then they wrongly believe that a gap magically puts pressure up or down on the stock price in order to fill it (except when it doesn't).

Granted, gaps are associated with massive swings in price, which are often over corrections. Here it isn't the magic of the gap that makes it fill, it's the over-correction.

And what causes most gaps? Market valuation change during after-hours, causing a gap when trading resumes. Why should this change be more in need of a correction than one during trading hours?

It's charting superstition.