Based on tmf'er JannyGruenig's gap theory:LOD pre-gap $34.67HOD gap-day $29.93Gap=$4.74Subtract gap from HOD of $29.93= Gap Target of $25.19To those unfamiliar with the theory, and I have noticed this phenomenon throughout the years after discovering Janny's Gap Theory, the vast majority of these gap targets (90%+) are reached. It's been my observation that this occurs within the first few months (or sooner).The point is--while many of you may be tempted to jump into RIMM right here thinking you're getting a great bargain, think again. You should be able to get a much better price (and thus return).
Where can I learn about Janny's Gap Theory?
She posted about it years ago over on the short-term trading board. It was as phenomenon she personally observed. Essentially:--when a stock gaps downTake the LOD (low of the day) for the day before the gapsubtract the HOD (high of the day) of the gap-down dayThis = the gapThen subtract that gap from the HODThis will give you a gap target--it was Janny's observation that over 90% of the time the gap target is reached. After following her method, it's been my observation as well that the target is reached nearly all the time.btw--when a stock gaps up, the reverse is applied:take the HOD on the day before the gap-upsubtract it from the LOD on the gap-up daythis determines the gapTake that gap and add it to the LOD on the gap-up day to determine the gap target.There were a few caveats in her method--like takeover news, or similar events that created a gap would not be appropriate situations to use the method.
I should add that the gap target of $25.19 for RIMM was already reached on 7/29/11.
I'm still shorting it now and hope to see a good price to cover it. My expectation is around $24.
Just understand that once the target has been reached, it's no longer valid. You'll have to look for other technical indicators--fibs, ma's, oscillators, etc.
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