by Teresa Lo
Let's update yesterday's picks.
MO opened gap down under our trigger price, so the order was cancelled. We need it to actually trade through the alert price in order to trigger the trade because if you think about it, this is the opposite of the "gap and crap".
In trading language, "gap and crap" means that a stock opens up above yesterday's high, and then falls back into yesterday's trading range. Often you'll see stocks open gap down, only to jam up through yesterday's low and then continue on. Perhaps they should call this "gap and jam" but I think Larry Williams already coined a name for it: The Oops Trade.
When a gap takes place on the open, we need to see what happens if traders make an attempt to test it. For example, with MO, as price started up after the gap down, we would be looking at the previous day's low to see what happens. The only thing we know about the previous day's low is that it was a place where buyers showed up before. Once broken, we need to see if broken support has become new overhead resistance. It basically forces a swing trader to enter intraday, and therefore, if you are not in position to enter intraday, the best thing is to cancel your standing order on a gap up or gap down.
The sell stop on MMM was not elected, as it did not trade under Monday's low.
I was in bed early, trying to shake this bad cold, so I don't have any picks for today.
03.12.17 09:00 #