An interesting observation.
It is expected that our Markets will gap down, along with Asian Markets on Monday. So the following study was conducted.
I looked at SENSEX chart to assess how the Gaps up and gaps down behaved. I spotted all the gaps up and down which happened after 2005.
First test was conducted with 0.5 % gap ( Up and Down) and then proceeded with 1, 1.25 and 1.5%.... Against my expectation, it is found that, irrespective of it is a gap up or down “above 1.5%” resulted in a downward breakout !!!.
Even after a gap up, within a couple of days, it breaks down. Something that does not fit into logic, but it is the reality. The exception is the one that happened on the election result day. All others resulted in a downward breakout. For those who want to see it on the chart, the occurrence dates are listed below.
| Number | From | To | | | Breakout |
| | | | | | Direction |
| 1 | 8/14/2007 | 8/16/2007 | | | Down |
| 2 | 10/26/2007 | 10/29/2007 | | | Down |
| 3 | 6/6/2008 | 6/9/2008 | | | Down |
| 4 | 7/22/2008 | 7/23/2008 | | | Down |
| 5 | 9/5/2008 | 9/8/2008 | | | Down |
| 6 | 9/12/2008 | 9/15/2008 | | | Down |
| 7 | 9/18/2008 | 9/19/2008 | | | Down |
| 8 | 5/15/2009 | 5/18/2009 | | | Up |
Further studies will be posted at a later stage.
Tweets @masterstrokes
