Gaps in Mastercard and Fluor Are Being Filled

July 8, 2008

A lot of earnings gaps are being filled… gaps are a controversial
subject in the technical trader world (of which I am loosely
associated, although I am more of a fundamentalist) - BUT we have to
respect charts and frankly the world looks a lot scarier without them,
because all you see are stocks in free fall. I went many years without
using charts when I first started and looking back now, I don’t know
how I did it - it seems completely foreign not to look at them at this
point. The controversy of gaps comes with the question - do all gaps
get filled? No, not all gaps get filled, but a good many do. Let me
show you two stocks I have sold off at higher levels patiently waiting
for their gaps to fill - both just filled them in the past 24 hours.

Fluor (FLR) @ mid $160s - FILLED!Mastercard (MA) @ low $240s - FILLED!

Now that is a positive step. However that does not mean this is “the bottom”. Certainly I could see the way things are going: Fluor falls to its 200 day moving average of the mid $150s and Mastercard
down to just under $220. Or maybe they stop here and reverse - but at
least with technical charts you have some sort of roadmap. And I cannot
stress that once again, this is simply not a buy and hold market. Even
the best stocks eventually are being taken to the woodshed, and I’m not
talking the cursory 5-10% correction that happens in long-winded bull
market movements.