I haven't been too ambitious to write for a while. Today I have a modest bit of motivation. It was an exciting day, for Investers. As it says in the Title of this post, the Stock Market Gapped-Up today!
Shortly after my 9:30 alarm sounded, my second phone (An old Cell Phone that I still use through Wi-fi) came alive with notifications. I was standing in my Kitchen, pouring a cup of coffee, and talking to my mother through a Bluetooth earbud. I knew something was happening.
I am quite eccentric when it comes to Investing. When I purchase a Stock, it is based on, "Fundamentals". Rather than analyzing Fundamentals, other retail Traders use Technicals. While I don't use them, I don't completely ignore Technicals either. I drew the conclusion that people use Technicals because they don't have a means to gather, store, and compare the data. They're left to follow the herd (as they heard) and seem to believe Stocks are a living thing with repetitive behaviors.
If you don't have the resources to assess Reports, the next logical thing to do is to follow what the Market is doing. The argument is the Market is right and the others are doing the Fundamental Analysis. The problem, and likely why so many fail using Technicals is they're not getting in front of the Market Trend. It seems they're feeding it instead.
One of the common traits of Technical Traders' is to use Stop-Loss Orders. After they buy, a Stop-Loss order is set at the lowest price it has traded over a predetermined amount of time. For example, 90 Days or the 52 Week Low. Think about that for a moment. Even if it was a wild animal with repetitive behaviors, why would you want it to Sell at that low price point? Especially if it had repetitive behaviors, that's where it would reverse. But that's not the case. Moving averages are always, "Moving". When they cross a point, it could be either because Investors desire the Equities, or the average moved lower for the time frame. There are two axes.
When you trade on Technical Analysis, a price drop is seen as an opportunity to acquire more. "The Stock went on Sale"!
And so, the Market Gapped-up
A gap is a discontinuous space in the price chart of an asset or security, often occurring between trading hours. A gap up is when the price of a stock opens higher than it closed the previous day, indicating a strong increase in demand or positive sentiment.
Today, November 14, 2023, the market gapped up significantly, breaking new records and surprising many investors. What could have caused this sudden surge in prices? There are several possible factors that could have contributed to this phenomenon, such as:
- A major news event that occurred after the market closed on November 13, 2023, such as a breakthrough in a vaccine, a merger announcement, or a favorable earnings report. This could have sparked a wave of optimism and buying activity among traders who wanted to capitalize on the opportunity.
- A technical breakout that occurred when the price of a stock or an index surpassed a previous resistance level, such as a high or a trendline. This could have triggered a large number of algorithmic orders or stop-loss orders that pushed the price higher.
- A continuation gap that occurred in the middle of an existing uptrend, signaling a strong momentum and confidence in the direction of the market. This could have attracted more buyers who wanted to join the trend or avoid missing out on further gains.
The most typical reasons for the stock market to gap up are related to changes in supply and demand, expectations, and emotions. When there is more demand than supply for a stock or an index, the price will rise to find equilibrium. When there is positive news or information that affects the perceived value of an asset or security, the expectations of future returns will increase. When there is optimism, excitement, or fear of missing out among investors and traders, the emotions will drive the buying behavior.
Gaps are important indicators of market sentiment and direction. They can provide opportunities for profit or risk for loss depending on how they are interpreted and traded. It is important to understand the different types of gaps and their implications before making any trading decisions.
It seems to me that it was caused by the Consumer Price Index report. Hopefully this surge continues. Ironically, I wasn't overly excited about the report, which surprises me. Another possibility is that China's Prsident is coming to San-Fran. The city is supposedly being cleaned-up for the event!