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The Deipnosophist

Where the science of investing becomes an art of living

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Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

07 April 2005

Change happens - watch for it!

Gaps occur frequently, noticeably, and unfortunately, rarely are understood. There are three types of gaps: breakaway, runaway, and exhaustion. I will save for another time a definition of each type of gap and an explanation of methods to deploy gaps in your analysis. Perhaps needless to say, however, gaps represent an obvious change in dynamics.

For example, Starbucks/SBUX. I fretted whether this recent activity would prove to be a base or top. Now, with today's possible breakaway gap beneath the 200-day sma, it seems to be a top. (Final critical support lies at $49-48.) The close for today and tomorrow (weekly basis) are important.


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Contrary to SBUX, however, is Google/GOOG. I previously have sung hosannas to it, perhaps ad nauseum. But its dynamics changed abruptly two days ago (Tuesday) when the shares enjoyed a minor, but important gap above its 50 day sma. This particular change is a bullish augury. (Recall the caveat expressed in the "Raindrops" post.)


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More anon re Google/GOOG...

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