Every Earnings Gap Is Either a Gap and Go or a Gap and Crap.

Microsoft

Microsoft's recent gap up following earnings indicates strong buying pressure. If the price continues to move higher and breaks through the overhead resistance level, it suggests a continuation of the upward trend. However, if the price closes below the low of the gap candle, it indicates a potential fakeout and a reversal in trend. The strategy involves entering a long position after a gap up and exiting if the price fails to break through the resistance level or closes below the gap low.

Gap and Go Strategy

The 'gap and go' strategy involves recognizing and capitalizing on gaps in price action, particularly when a stock gaps up and continues to move higher. This strategy is based on the idea that a gap up indicates strong buying pressure, and if the price continues to rise, it signals a new trend. The strategy is effective when the gap is followed by a continuation of the upward movement, indicating a shift in market sentiment towards greed. However, if the price closes below the low of the gap candle, it is considered a 'gap and crap' scenario, indicating a potential fakeout and a reversal in trend.

What was the reason for the speaker's fear of gaps and all-time highs?

The speaker used to be scared of gaps and all-time highs due to the potential for significant price movements and the risk of fakeouts. However, with experience and observation, the speaker has become more comfortable with these market phenomena and now views them as opportunities for trading.

TakeawayUnderstanding and adapting to market behaviors like gaps can reduce fear and improve trading strategies.