That's a great question and I forgot to show it on the chart. I'll do it in a minute. That gap down and then gap up is a 1 day island bottom. That is probably one of the strongest bullish indications you can find in an uptrend. What it tells you is that the news the night before (in our case, earnings) freaked out weak hands. The piled in in the morning to bail on their stock thinking it was going down.
Then! The buyers, or 'smart money' came in and thought otherwise. They were willing to buy the stock when they other wise just could have easily let it fall further getting at a cheaper price.
Then the next day, it gapped up. It's not the perfect island bottom. The 'perfect' island is one with both very clear down and up gaps with no gap fills like we have. You'll notice that the 'shadows' of both candlesticks tought the high of that day's candle. But it's still an island. And that confirms our bullish situation here.
Look at this chart of AKAM and you'll see a perfect island bottom and the subsiquent move. AKAM was downgraded with a $37 price target the night before that gap. But someone had other ideas....
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