TABLE 15-6 (Continued)

TABLE 15-6 (Continued)

"""" Con.

DIr Prv Ch Oprn Only Doy

()<ld

7 23 75 2 66

M 23

1. "Cont Only" shows that the chance of the market continuing in the same direction, without a pullback, is extremely small; therefore, a maiket that gaps up and continues higher should be sold, expecting prices to fall below the open.

2. Except for sharply lower opens and quiet opens, there is a greater chance that the closing price wiU continue the direction of the opening gap and a relatively small chance that prices wiH reverse and close through the level of the prior closmg price. This presents an oppommity to buy after a gap and a pullback. For example, a higher gap of 60 points has a 91**o chance of a pullback, only a 6** chance of a closing reversal, and a 64**o chance of a stronger close. A lower gap of 40 points has a 77**o chance of a rally above the open, a small chance of a close above yesterdays close, but only an equal chance of a weak close for the day.

3. The most extreme gaps, both higher and lower, are always interesting. For the Deutschemaik there seems to be no bias in the pattem over the past 10 years. None of the extreme moves shows a tendency to continue in a predictable direction, but none of them reversed on the close. This would indicate thai extreme gaps do not mark the end of a move.

Some of the interesting features of the other maikets in Table 15-6 are:

S&P 500

The percentage of time that S&P prices cross the pre™us closing price, or reverse direction on the