Question on Gap Plays

Hey gang, I had a question earlier today from a client that I am working with on trading morning gap and momentum plays. He was having a hard time finding a lot of the types of gaps that I look for and have been teaching him to look for. Everything right now is pretty much hanging on the outcome of new coming out on the credit and banking crisis right now, so indeed there have been a lot fewer of the momentum gap moves in individual stocks. Keep in mind that we are also between earnings and warnings seasons, so there just is not a lot coming out from that direction either to really get things moving.

I actually have been trading primarily afterhours lately due to a project I'm working on and haven't been around much intraday to have to deal with the slop. (Somewhat intentionally as well.) I did trade RIMM short mid-day from $72.51-$71.52 short, but got out at 12:19 at that early morning support for a position that lasted only about 30 minutes as just a scalp on the initial move lower into lunch. I would not be surprised, however, to see it continue lower this afternoon to somewhere around $70. The breakdown coming out of their earnings announcement yesterday afternoon has held down techs overall and the Nasdaq is vastly underperforming the rest of the market, even though the Dow actually managed to form the gap closure setup I often talk about in my Market Action Letter this morning and did so in nearly a textbook manner. I'll review the strategy again in this evening's commentary as well.