For your future consideration could you elaborate a little on the psychological explanations for gap-filling pressures. Why would such a target be more compelling than plain vanilla support and resistance, which are easier to understand? Is it a strong memory of “the price got away from me” mentality that the market is waiting to jump on? Is there strong statistical evidence? thanks, Steve
Gary February 26, 2023
Steve, I don’t have a scientific explanation for it. But I have noticed over the years the tendency for most gaps to fill, sooner or later. What I *think* happens is that gaps represent emotional momentum, either up or down. And I do believe that emotion is almost always punished or closed out in markets, one way or another or at one time or another.
Armen February 28, 2023
In the spirit of open mind: sitting in cash wasn’t a good choice in late 70s. Gold, BGMI, SPX rose together with FFR
Gary February 28, 2023
Absolutely agree. But at this time it is a perfect way station when evaluating near and longer-term backdrops.
For your future consideration could you elaborate a little on the psychological explanations for gap-filling pressures. Why would such a target be more compelling than plain vanilla support and resistance, which are easier to understand? Is it a strong memory of “the price got away from me” mentality that the market is waiting to jump on? Is there strong statistical evidence?
thanks, Steve
Steve, I don’t have a scientific explanation for it. But I have noticed over the years the tendency for most gaps to fill, sooner or later. What I *think* happens is that gaps represent emotional momentum, either up or down. And I do believe that emotion is almost always punished or closed out in markets, one way or another or at one time or another.
In the spirit of open mind: sitting in cash wasn’t a good choice in late 70s. Gold, BGMI, SPX rose together with FFR
Absolutely agree. But at this time it is a perfect way station when evaluating near and longer-term backdrops.