[weiwei]

Here is my 2 cents on gap.

1. up day, up day and gap up, or down day, down day then gap down. fade it

2. If there is afternoon strength yesterday, then gap up, then I do not fade it and start to look for sign of a trending day.

On 1. this is from Linda Rashisck, and the way that I use it is to measure the current swing with last swing. If the pass 2 to 3 days put in a nice swing that is close to last swing, then it gap up big or gap up and run up. and when it is hitting on a important SR level, when that the risk reward is good, I will start to look for sign of weakness. Usually on ER2 more then 4 points and on YM more then 40 points is what I look for. It dose not happen a lot, but when it happen, it is usually very reliable.

on 2, after those Index markets have been beat down for 2+ days or in range mode for 2 day+, then if a rally came on the afternoon with nice volume and steady up. (like today).

I perfer a V shape and close at swing high, in other word, showing strength into the close. Then if there is a gap up, I then start to look for sign for a trending day. Or at least not to fade the gap.

weiwei