Replies to post #65254 on Enzolytics Inc (ENZC)

[redwing992006]

not sure why, but they seem to often fill ; I think "traders" turn them into a self-ful"filling" prophecy if the share price starts heading back down and they feel the price will go down further to fill the gap, so they sell and hope to buy back lower near the gap. All of the chart "indicators" are just what happened previously, NOT predictors of the future, However, if is amazing how share price gets near support/resistance points

[jay52]

Three reasons in my mind. First, upon gap-up, there is no natural support or resistances...no places where the stock has traded to serve as bottoms for the stock...so there’s nothing to keep it from falling back. Second, there’s a bit of self-fulfilling prophesy to it...it’s like VWAP or a support...if enough expect a bounce off of it, it will...with a gap, we expect them to close...so we don’t buy until they do.

Third, and this is the most questionable but I believe it, is that MMs like to close them. Some of that is reinforced by my second point...but for the most part I believe it’s part of the trading algorithm...their job is to make market, especially if the stock becomes illiquid...and so they’ll close those gaps as a logical target. I find that they usually happen after a bear raid...might as well close the gap when you trip all of the stupid peoples’ stops.

These are for common gaps. Runaway gaps might not cover...or they won’t until and old gap comes back in range because of falling PPS. IMO.

[God_Father]

The simple answer is that Gaps don't have to fill and they sometimes don't. Actually, I did a ton of research on this and know that based on one statistical study, 91.4% of gaps close. There are also many different types of gaps. The one that doesn't close is technically called a "Runaway Gap" and there are millions of examples of stocks that do this. Stocks do tend to close gaps for a few reasons such as over-correction, but even when gaps don't happen stocks tend to see the same price a few times over. In some cases, it is a self-fulfilling prophecy, just as much as those that tend to believe the Clay + minion myth. Clay doesn't cause the share price to drop, its the shareholders that do. At the end of the day it's about what side the collective tends to swing in and driven by our psychological behavior.

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