Exhaustion gaps

Agilent · #1 31st March 2006, 10:26 AM

In TA there is a type of Gap ('Exhaustion' gap ) which suggests the imminent (though not immediate) culmination of a trend ... see link

http://www.streetauthority.com/terms...naway-gaps.asp

I wonder if what we saw yesterday (see chart... gap marked for info of the uninitiated) is one such gap (remember in the past few weeks we have had at least 2 such gaps ... hence the probablilty of this latest one being exhaustion)

Even if it isn't, I will be surprised if this gap isn't closed within a week. And if it is, then according to theory we are in for a trend reversal ... sigh !!

Experts' views ? Traderji ?

AGILENT

srisara · #2 31st March 2006, 04:08 PM

Agilent,

even Baron was talking about it and straightway says there was a GAP at 6300 level and it should be closed, so market will crash to 6300 level by July.

after his post market has notched up around 500-600 points. Its tough to say that these gaps shall be filled in near term.

lets ride the market with good Money Management Techniques...

Satya

Agilent · #3 31st March 2006, 05:19 PM

Sri
With respect, I think if u were to read my post again (with the link and the chart) u will find I'm talking about a different scenario altogether ... and making no predictions, but only seeking expert opinions

Also by the way, I was the first to stress to Baron that his talk of 6300 by July was too far fetched (and knowing me, u will probably realise that I was being polite in my arguments countering his prediction ... that was an interesting thread ... suggest u read it again, if its still there)

Recall that Baron had cited some 5 or 6 different (mostly economy related) grounds for his prediction, besides astrological. Filling the gap (made at 6300 ) was the only TA related ground .... and that to me looked unreal because TA doesn't say ALL gaps must be filled (if that were so .. conjecture the possibilities ... gap at 1100 ??? will it be filled ?)

Finally , Sri ... what is YOUR prediction/view on when a trend reversal will come about ... surely it has to come SOME DAY !

Think about it ... no party lasts forever

AGILENT

aca_trader · #4 31st March 2006, 09:49 PM

Quote:

Originally Posted by Agilent

In TA there is a type of Gap ('Exhaustion' gap ) which suggests the imminent (though not immediate) culmination of a trend ... see link

http://www.streetauthority.com/terms...naway-gaps.asp

I wonder if what we saw yesterday (see chart... gap marked for info of the uninitiated) is one such gap (remember in the past few weeks we have had at least 2 such gaps ... hence the probablilty of this latest one being exhaustion)

Even if it isn't, I will be surprised if this gap isn't closed within a week. And if it is, then according to theory we are in for a trend reversal ... sigh !!

Experts' views ? Traderji ?

AGILENT

A quote from the abovementioned link says : "Genuine "breakaway" gaps are typically not filled for long periods of time (months, years), if at all. When a gap occurs, I argued, it is important to ask yourself what type of gap it is. Time is often necessary to judge the gap accurately. If prices after a "breakaway" gap retreat, but then hold above the gap and take out the high, then you probably have a genuine "breakaway" gap."

Now the chart pattern of sensex attached is showing that the gap was created, then it retreated, did hold above the gap and then did take the high. Applying this criteria, IMHO, it's a breakaway gap which indicates further bullishness asa against exhaustion gap which is most probably going to cause a trend reversal. BUt then in TA, everything is based upon if's and but's.

Best Regards,

Agilent · #5 31st March 2006, 11:07 PM

Thanks Aca, its nice to see guys applying their minds .

Will try and dig out a sensex 2 mth chart which has the previous gaps as well ... that may make the picture (and prognosis ) more clear ...

AGILENT

srisara · #6 31st March 2006, 11:46 PM

Agilent,

I wasn't disputing you. I just recalled the Baron story and put it here.. Also, Aca Trader has given a good analysis.

Now coming to exhaustion gaps and filling up and also break away gaps. I think when it comes to index and an individual scrip, both cannot be compared in same line.

So, these exhaustion gaps can be indeed exhaustion gaps, only thing is it may take some time for reversal. we have to wait for it.

Also, there may be correction and there may be not. What goes up has to come down. Why waste time and sleep in waiting for a correction.

Enjoy the ride and if you have your Money Management Techniques in place even with a big correction u shall be out of trades with decent profits..

enjoy the ride....

Satya

rangarajan · #7 1st April 2006, 09:08 PM

This Exhaustion Gap theory seems to apply aptly well for the scrip ICSA(BSE 531524).The scrip had galloped since four days & has started retracing to fill the gap.but on the exhaustion day(31st),it had surpassed the previous high.All other parameters hold good as per theory.could the forum members pl analyse & comment.
Besides ,this counter seems to be good for both ,investing & trading as seen from the last 4 months chart.
ranga

Agilent · #8 3rd April 2006, 08:49 AM

Quote:

Originally Posted by rangarajan

This Exhaustion Gap theory seems to apply aptly well for the scrip ICSA(BSE 531524).The scrip had galloped since four days & has started retracing to fill the gap.but on the exhaustion day(31st),it had surpassed the previous high.All other parameters hold good as per theory.could the forum members pl analyse & comment.
Besides ,this counter seems to be good for both ,investing & trading as seen from the last 4 months chart.
ranga

Ranga

I tried and tried but could not spot a good chart of ICSA ( ICICI Dir charts seem to be having a bout of flu ... sad !)

Anyway, .... will do so later and add my own analysis of ICSA, which seems to be a promising case study, on various fronts

Meanwhile, lets not digress from the theme of this thread ... namely the likely trend of Sensex ( market proxy) at this juncture.

I maintain we are in for a correction .. the undertone at close last fri was weak, so I would advise caution to all eager longs / bulls

Good luck
AGILENT

Agilent · #9 4th April 2006, 09:28 AM

Well obviously this thread seems to have been ill-conceived, or premature ... as the market continues to rise in a frenzy

Here are some thoughts from recent press :

1. Interviewed by ET on Sunday,2 Fund mgrs of Batterymarch (member of Legg Mason Grp... managing assets of $ 830 billion) had this to say : "We are underweight on India ... mainly on account of valuation , which are at 18 times forward earnings , and appear high relative to other emerging markets . The probability of generating positive returns (alpha) is much lower if you were to buy into markets (implying India) that trade at high P/E levels. In contrast to India .... Korea quotes at 10 times, China and Indonesia are at 11-12 times..."

2. Today's TOI says "there's something almost surreal about what's happening in the markets..... panic-stricken fund managers invested heavily in the past week to avoid sitting on cash (and) a lot of money was still left over "

3. Today's ET quotes Deepak Jasani (who's he ?? .. HDFC Secs Head Retail)... " although people are still groping in the dark for the actual reasons behind the rise , it could also be due to the new quarter allocation by foreign investors"

Why do you think I have laboured to compose this post ?

Because I still maintain that the market is getting overvalued and we are in a bubble zone .... so it may be wise to sit on cash , or at least hedge oneself with nifty puts

The momentum of yesterday may well spill over in the short term, but IMHO that will only blow up the vulnerability of the markets.

Views ??

Happy Trading/ Investing

AGILENT

srisara · #10 4th April 2006, 09:51 AM

Agilent,

no doubt in that.. market is just going at a cruise speed.. see the nifty its almost going like a rocket towards the sky.

we never know when a technical snag will hit and it shall come down.

coming to P/E ratios, i read its already touching 20.

Satya..

Similar Threads for: Exhaustion gaps
Thread	Thread Starter	Forum	Replies	Last Post
How to scan for opening price gaps?	pasha	Technical Analysis	4	23rd March 2006 12:39 AM
Technical Analysis - Gap and Gaps	bhavana	Technical Analysis	1	4th March 2005 08:17 AM