[michaelstuarts]

The Dow is above 1300

Many stock charts (e.g. AMZN) are giving mixed signals. Some stocks have shown exhaustion and overbought indications before the DOW reaching an all-time high. Now many stocks appear to have breakaway gaps and appear to to have new life to to them. I don't like to follow the crowd after news. Is this a breakaway gap ? Will this gap close in the next few weeks ? or Is this a new long-term trend ? Will the DOW keep making new highs or will the bubble burst ?

Will the investors holding this security be in for a surprise ?
Housing market is down and the dollar is weak, what other economic indicators
should I consider ?

Where can I learn more about gaps and gap plays ?

Thank you,

//Michael



Several stocks have this kind of pattern now.

[TinGull]

Might I suggest looking into Strategies (one of our sponsors, and my trading coach). He has some very great strategies for gap plays and can get you on your way.

Originally Posted by michaelstuarts »

Where can I learn more about gaps and gap plays ?

TradeTheMarkets.com has an extensive library of training videos and commentaries on trading the gaps.

[MrPaul]

To add to what has already been mentioned...

A good book for gap fade plays is:

Amazon.com: Mastering the Trade (McGraw-Hill Trader's Edge): Books: John F. Carter

If you are looking to play continuation gaps on individual stocks look here:

Trader-X...views from a distorted mind.

[brownsfan019]

Originally Posted by michaelstuarts »

Many stock charts (e.g. AMZN) are giving mixed signals. Some stocks have shown exhaustion and overbought indications before the DOW reaching an all-time high.

Michael - in a trend - up or down - indicators are going to be useless in my opinion. Just look how long AMZN has been 'overbought'.

One thing I learned about indicators - they can stay overbought much longer than your account can stomach trying to short them. I don't use these types of indicators anymore for this very example. As soon as you get caught into a strong trend and your indicator keeps saying it's time to short, you will get hammered. Once the market takes a breather and/or enters more 'choppy' times, the indicator will look like gold assuming you and your account are still trading.