![]() For example, if an analyst upgrades a stock from “hold” to “buy”, this could cause the stock to gap up. Similarly, if a company announces poor earnings, this could cause the stock to gap down as investors sell the stock.Īnother common reason for gaps is when there is a change in analyst ratings or price targets. For example, if a company announces a new product, this could cause the stock to gap up as investors buy the stock in anticipation of the new product. One common reason is that there is news about the company that causes investors to buy or sell the stock. There are many reasons why gaps can form in stocks. RECOMMENDED: Go here to see my no.1 recommendation for making money online What Causes Gaps? Such indicators are used by investment analysts and I have reviewed the works of some of the more popular ones like Marc Chaikin and Tom Gentile. We will take a closer look at them later. As their names suggest, breakout gaps signal a break from a previous trading range while continuation gaps signal the continuation of an existing trend. There are two types of gaps that commonly occur in the stock market: breakout gaps and continuation gaps. You might want to buy more shares at $12 to fill the gap. For example, imagine you own shares of Company XYZ and the stock price gaps up from $10 to $12. ![]() ![]() The dictionary defines a gap fill as “an unfilled space or interval.” When it comes to stocks, a gap fill is the act of buying a stock to fill the void left by a previous price move. RECOMMENDED: Go here to see my no.1 recommendation for making money online What’s a Gap Fill?
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