Going Long on Gap Ups? Really?

On Friday, February 26, 2010 an article in the “Making Money – Investors Corner” section of Investor’s Business Daily (IBD) written by Paul Whitfield, caught my attention. The article was about breakaway gaps as a bullish form of action. Whitfield illustrated several examples where stocks with price surges of 10% in a day often had very nice price appreciation gains several months in the future. The concept used in this type of stock selection depends on the positive event having some lasting power and traction. It uses the concept of buying high on positive news and selling higher. Articles in IBD often advocate this technique. This is the opposite of the buy low / sell high approach so often talked about by swing traders and other technical analyst.
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