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PPR - Lesson on buyable gap ups

Buyable gap ups are always in context with a) the stock's fundamentals and technicals, b) the overall market, c) current market conditions.

Since the current market has been volatile, we have advised pyramiding in slowly into a position, letting price prove itself.

With gap ups, one can wait until the stock settles down after it opens and establishes a probable low. If the stock is gapping up from a position of great technical strength and moves higher after it opens, a small position can be bought. This is done by examining the intraday chart.

With FIO in today's trade, out of the starting gate, it sold off, then undercut the prior day's closing price. This is always a negative for any buyable gap up situation. The gap has been closed but truly powerful buyable gap ups do not close their gap but continue higher from the gap up point.

Should FIO have a strong close, it will be on substantial volume. It could then be treated as a base breakout followed by its original gap up on October 24, 2011. Keep in mind that since it is an IPO and has come straight up from the bottom, it is subject to greater volatility, so pyramiding into the position can be a viable strategy.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2020 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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