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Trading Lessons

Swing Trading Stocks with the ABC Gap Fill

InvestorEducation / Learn to Trade Feb 28, 2013 - 06:20 AM GMT

By: David_Banister

InvestorEducation

One of my favorite “Crowd Behavioral” patterns is the ABC Gap fill pattern. This is a normal correction pattern in the stock market that works off overbought sentiment. You can apply this to liquid individual stocks in most cases, and look ahead to spot potential entries on your watch list for trading.


A sample we will use today is KORS, a fast growth stock of the leading luxury retailer Michael Kors. We notified our subscribers several days in advance to watch for a gap fill at $57 on this stock before entering a long trade. We also spotted what looked like a classic C wave pattern coming down from a B wave interim top.

Sure enough it took several days but the stock worked its way down to $57 and hit the gap on the nose on February 26th. It immediately reversed to end the day $2.25 higher or about 4-5% swing gains on this pattern. The chart below shows a 1, 2, 3, and 4 pattern with ABC making up the 4 pattern on KORS stock.

At ATP, we look for ABC and other patterns in growth plays and swing trade them long for reversals, just as the crowd of traders has stopped out and gone sour on the stock. Consider joining us by learning more a www.activetradingpartners.com

Dave Banister

CIO-Founder
Active Trading Partners, LLC
www.ActiveTradingPartners.com
TheMarketTrendForecast.com

Dave Banister is the Chief Investment Strategist and commentator for ActiveTradingPartners.com.  David has written numerous market forecast articles on various sites (MarketOracle.co.uk, 321Gold.com, Gold-Eagle.com, TheStreet.Com etc. ) that have proven to be extremely accurate at major junctures.

© 2013 Copyright Dave Banister- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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