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In order to differentiate them better, the alarm sound is now different for alarms triggered on price levels and for alarms triggered on keywords in news stories. The sound for alarms on stories keywords is higher pitched.
Most of the time stocks open at the same price that they closed the previous trading session (give or take 1/8th). However, on occasion, due to some news, rumors, earning reports, corporate developments, etc., stocks will open significantly higher or lower than the previous day's close.
Many people use gaps in a sort of a contrarian way: if, for example, a stock or commodity gaps up but then reverses itself later in the trading session and starts dropping and eventually fills the gap, meaning that the price goes below the gap level, then this is a strong indication that the price is going to go further down. Therefore, many traders will either cover their long positions at this point or go short.
In our research -- which was initiated by input from DollarLink customers -- we have found (in about 70% of the stocks that we examined) that if the gap is significant enough, then the stock will have a substantial move in the same direction within about the next 5 trading days. (This does not conflict with the possibility of a stock reversing and filling the gap on that same day. The filling-the-gap event is a short-term, one-day process. The significant-gap event is a longer-term, several-days process.)
The definition of significant enough varies for different stocks. In general it should be between 1 and 5 percent of the stock's price. Usually, more volatile stocks have a higher gap to jump before they decide to eventually head in that direction for good.
In our research we have concentrated on highly liquid stocks. The less-traded stocks appear to have more erratic behavior. The system can be applied for liquid commodities as well, but the results seem to be less reliable than for stocks (at least for the commodities that we looked at).
After that, DollarLink will ask you if you want to limit the gap list that it is going to compile to only portfolio stocks that meet this gap criterion. (DollarLink normally creates a gap list for portfolio stocks that meet various gap criteria, Significant Gap being one of them. If you just want to see issues that meet this Significant Gap criterion, you should say yes to that question.)
After it has compiled the list, DollarLink asks you about its disposition. You can print it or save it to a file.
If you save it to a file, the name of the file will be MMDDYYnn.GAP , where nn is a sequence number between 00 and 99, and MMDDYY is the current date. You can view the saved file while in DollarLink by pressing CDV (Control, DOS, View) choice from the basic text screen. DollarLink will ask you for the name of the file to view and you will type its name in, e.g., 06079602.GAP . You can then view file on the screen and scroll up or down within it.
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