Thursday, January 31, 2008

01.31.08 - First Hour Recovery

As suggested in yesterday's afternoon update, the market showed its hand in the first hour with a nice upside reversal in spite of negative news. Traders call this "filling the gap." Currently, we are seeing some resistance at R1. It looks far below, but daytraders may look to yesterday's pivot, the rising 5-day moving average, and VWAP as support and/or for stop losses on the gap trade.

Speaking of which, here is a good article on trading gaps down in bull versus bear markets (highly recommended daily blog by Rob Hanna). I did manage to cover most of our short hedges this a.m. in spite of caring for a sick child at the office today.

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