George Brooks: Gap Open Likely - Easy Does It

George Brooks |

Gap Open Likely – Easy Does It

Friday, I warned readers NOT to buy the open, since the stock-index futures indicated a sharp increase in prices in early trading, thus the risk of paying the high for the day. Buying a “gap” open is rarely a good idea, since prices are generally marked up sharply.

Again today, the futures indicate a big jump at the open, but this may be different, since we are not headed into an uncertain weekend and since news out of Japan is improved (for the moment) and limited military action has been taken to support the rebels in Libya.

Brooksie’s Daily Stock Market blog
-an edge before the open

Monday, March 21, 2011 9:23 am EDT

DJIA: 11,858.52
S&P500: 1279.20
Nasdaq Comp.: 2643.67
Russell 2000: 794.66

Even so, limits on orders is prudent, rather than an open order to buy the open – your call.

We will have second thoughts about the good news coming out of the weekend. The situation in Japan can turn on a dime; the military intervention in Libya can result in higher oil prices. While Saudi Arabia has promised to pick up any slack in the supply of oil due to a potential shortfall from Libya, the price will be higher. Libya’s oil is the good stuff, less costly to refine, vs Saudi oil.

The ball is in the BIG money’s court. I am sure their computers were NOT programmed for a combination of an earthquake/tsunami/nuclear meltdown in a major world economy, plus an escalation in Mid-East tensions. We will see how they react.

Today: Expect an assault on DJIA 12,000 (S&P500: 1298) before 10:30. Most likely, we will have some kind of test of last week’s lows – too early to tell when, if it even happens.

I really don’t like to JUMP on unexpectedly good news at a “gap” open. Yes, most of us are heartened by the news out of Japan and the Mid-East, but I would rather wait to see trading settle back after the euphoria has eased.

George Brooks
sensiblesleuth@gmail.com

Gap Open Likely – Easy Does It

Friday, I warned readers NOT to buy the open, since the stock-index futures indicated a sharp increase in prices in early trading, thus the risk of paying the high for the day. Buying a “gap” open is rarely a good idea, since prices are generally marked up sharply.

Again today, the futures indicate a big jump at the open, but this may be different, since we are not headed into an uncertain weekend and since news out of Japan is improved (for the moment) and limited military action has been taken to support the rebels in Libya.

Brooksie’s Daily Stock Market blog
-an edge before the open

Monday, March 21, 2011 9:23 am EDT

DJIA: 11,858.52
S&P500: 1279.20
Nasdaq Comp.: 2643.67
Russell 2000: 794.66

Even so, limits on orders is prudent, rather than an open order to buy the open – your call.

We will have second thoughts about the good news coming out of the weekend. The situation in Japan can turn on a dime; the military intervention in Libya can result in higher oil prices. While Saudi Arabia has promised to pick up any slack in the supply of oil due to a potential shortfall from Libya, the price will be higher. Libya’s oil is the good stuff, less costly to refine, vs Saudi oil.

The ball is in the BIG money’s court. I am sure their computers were NOT programmed for a combination of an earthquake/tsunami/nuclear meltdown in a major world economy, plus an escalation in Mid-East tensions. We will see how they react.

Today: Expect an assault on DJIA 12,000 (S&P500: 1298) before 10:30. Most likely, we will have some kind of test of last week’s lows – too early to tell when, if it even happens.

I really don’t like to JUMP on unexpectedly good news at a “gap” open. Yes, most of us are heartened by the news out of Japan and the Mid-East, but I would rather wait to see trading settle back after the euphoria has eased.

George Brooks
sensiblesleuth@gmail.com

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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