I noticed that GILD was gaping down this morning before the open on good volume so this was really the only stock that was on my radar on this late 22nd day of December. I was looking for a one and done play and GILD came through handsomely. With almost a perfect Tier I type gap I almost shorted immediately but I really scored the gap as a Tier II, anyway I wanted to see some green first before I took the play short. Well, price just continued to fall hard for the first 4 minutes from the open. Even though the spread was pretty tight, I still waited to see what the bulls could do and finally the 5th bar closed green. The next bar closed as a small narrow red range bar in the upper 3rd of the previous bar (possible 123 play long). I was prepared to go short if price took out the low of this narrow range bar, it went red but it failed to take out the low but then price shot upward in a flurry and I took the play long at 95.37. Price rose like a rocket and I found myself selling shares at 95.91 two minutes later and I sold my final shares at 97.44 with a huge profit nine minutes later. Wow, huge profit this morning in just over 15 minutes of work, I’ll take it! You my ask, why I decided to go long? Well, price had hit a Fib level that I had drawn on my 60 minute chart after the gap and you could see that price was in an area of Major Support on the weekly chart. So I felt that price had already hit the lower target and now with the gap, there was a huge void long. I’m not saying that a short would not have worked, but I would have had to wait for the short to set up properly. Gap trading like anything else takes practice, when you become good at it, you might find that you’re really not interested in anything but a gap trade.
Below is the daily chart of GILD