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Follow-up to "Tomorow's Post Crash Gap"

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Tuesday, October 7, 2008 at 5:04PM

Gap Guy tagged

Futures,

S&P 500 in

Gap Size,

Patterns

As shown in the prior post, 9 of 10 "post crash gaps" have filled historically.

Though Otis my system did not generate a gap fade signal for today's 20 point gap up, per the "post crash gap" data in yesterday's blog, I knew that a gap fill was probable. So, I waited for an opportunity to short after the opening. Here's what I called out for members of the Trading Room and posted in my daily "Gap Wrap" at www.MasterTheGap.com:

"After some weak action following the bell, I set up a short with a 4 pt stop just under the opening price. I was run over like a turtle on a country road as prices ran up and tested the overnight high. Prices then failed quickly and it became clear that sellers were "in the house" so I shorted at 1170 with another 4 pt stop. This was an aggressive (read that: sloppy) entry and I survived a hard bounce by the skin of my teeth. But prices then tanked and I scaled out for +3 and +16 pts."

Here's today's 5 minute chart of the E-mini S&P 500:

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