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In his book "Pit Bull" Marty Schwartz (market wizard sp trader ) mentions that he follows gaps. He watches unfilled gaps as an indicator of trend and market direction.
I got to thinking and pulled out some charts.
The SP performed wonderfully using this idea. If you take an unfilled gap - a close to subsequent opening- if after say 2 or three days it is unfilled it predicts direction quite well.
Notice the many unfilled gaps we have had here on the trend up for the last few months.
Look at the recent collapse in Chi wheat many unfilled gap downs that remained unfilled after a few days called the direction well.
Idea: how could one program a system based on gaps using TS ( Mr. Gibson can it be done?) It seems the number of days following the gap is critical, it is hard to tell when the optimum time to trade after the gap is unclear.
Timothy Lee
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