BZ Chart Of The Day: Is AT&T About To Refill The Gap?

BZ Chart Of The Day: Is AT&T About To Refill The Gap?

Gaps refill, and shares of AT&T Inc. T may be about to do so. This would mean a rapid move lower.

A gap is an area on a chart where a stock didn’t trade. As you can see on the following chart, AT&T gapped up from $18 to $19. Now it may be about to refill, or gap right back down to $18.

Sometimes, support for a stock forms because some investors experience seller's remorse if the stock they sold moves higher. They decide to buy their shares back, but they will only do so if they can get them for the same price they sold at.

If there're enough of these buy orders, support will form.

When AT&T gapped up from $18 to $19, no shares traded in between these prices. Because no shares traded, no investors bought or sold. This means there won't be remorseful sellers creating support with their buy orders.

This is why stocks that gap up through price levels can gap right back down through them. There may not be enough buyers within the range to prop up the price and keep it from dropping. Shares of AT&T may be about to refill its gap.

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