In this post we look at gap fills. When names can find a bounce where prior gaps are filled on a chart, one has to view that action as constructive. Sometimes gaps will fill rather rapidly, perhaps on a news event or earnings, but we prefer that some time plays out. The 2 names below notice took 2 months, a gradual process. If you can find names that fill in the gap with other areas of prior support or important moving averages, or at former breakout pivot points it can significantly put the odds of profitability on your side. Both GDDY and NUAN have the 200 day SMA play an important role. Below is how both names were presented in our daily Game Plans.
In our Monday 1/25 Game Plan we looked at tech play GDDY. The stock is currently down 5% YTD, but like the markets has advanced nicely the last couple weeks. The week ending 1/22 produced a bullish hammer which also filled in a gap from 11/4 and on Friday it not only recaptured a previous 29.94 double bottom trigger but CLOSED above the round 30 number. We also admired how it never CLOSED below the 200 day SMA too. Volume was robust to finish the week on Friday.
Stocks that can be bought after recent gap fills are GDDY. GDDY is an internet play down 9% YTD and higher by 12% since inception last April. It has only posted 3 earnings reports and produced 2 gains of 18.2 and 4.2% on 11/5 and 5/12 and a loss of 11% on 8/6. The most recent release on 11/5 took out a double bottom trigger of 29.94 and encapsulated within the whole pattern was a breakout from a 33.10 cup base pivot point of 33.10. The very next session recorded a bearish shooting star and it did so again on 12/18. GDDY now rests 17% off recent 52 week highs and found comfort at its 200 day SMA. It also this week filled in a gap from 11/4 and lets look to enter at 28.75.