Investment jargon defines a “gap” as the difference between an investment’s opening price and its prior day closing price. “All gaps (eventually) get filled/closed” means that the “gap” price difference is eventually closed, although this might not always be the case.
“All gaps must be filled (or closed)” has been cited in print since at least 1975.
The Gap Guy—Gap Glossary
Gap: The most common definition of a “gap” is the difference between an asset or instrument’s opening price and its prior day closing price. This difference shows up visually on a technical price chart as an open space or “gap.” (Note: some traders define a gap as the difference between the prior day high or low and the next day’s opening price.)
Getting Rich in Commodities, Currencies, or Coins Before or During the Next Depression
By Robert P. Vichas
New Rochelle, NY: Arlington House
There is a popular notion that all gaps must be filled (or closed), which means that in a subsequent rally or reaction trading takes place at prices corresponding to the “hole.” Gaps are frequently but not always filled.
Google Groups: misc.invest.stocks
From: Gary Snyder
Subject: Re: Iomega to report problems
We probably won’t live long enough to be able to prove 1 way or the other weather or not “all gaps get filled”. But I can say for sure that some of them don’t get filled for many years, sometimes decades.
Google Groups: alt.invest.penny-stocks
From: “Charles and Leslie Holubeck”
Subject: Re: LOCH TOMMOROW, I REALLY NEED TO KNOW!!!
I don’t know about a gap up tomorrow, but it did gap down today. The general rule is that all gaps eventually will fill.
Google Groups: misc.invest.technical
Newsgroups: misc.invest.stocks, misc.invest.technical
Date: Wed, 11 Jul 2001 22:41:26 -0600
Local: Wed, Jul 11 2001 10:41 pm
Subject: Re: The gap is filled…
There is a theory in technical analysis that all gaps must be filled.
Profitable Candlestick Trading:
Pinpointing market opportunities to maximize profits
By Stephen Bigalow
New York, NY: Wiley
All windows eventually get closed or all gaps eventually get filled.
Dec 24, 2003, 11:37am
Re: Gap close theory
It’s supposed to be that all gaps eventually get closed - even if they don’t get closed on the day they are formed. Seems to work, but there’s no indication of exactly how long you would have to wait.
There are lots of different types of gaps - some stocks gap as a matter of course, others do so periodically and these are the ones to pay attention to.
Mastering Technical Analysis:
Using the tools of technical analysis for profitable trading
By John C. Brooks
New York, NY: McGraw-Hill
Gaps don’t have to be filled. The point is that most gaps on charts are filled rather quickly. But there is no hard-and-fast rule that says all gaps must be filled.
Technical Analysis of Stock Trends
By Robert Davis Edwards, John Magee and W. H. C. Bassetti
This, incidentally, upsets the common superstition that all gaps must be closed before the trend can be trusted to continue very far.
The Gap Guy
How Long For Open Gaps to Fill?
Friday, October 17, 2008 at 4:46PM
One of the common perceptions about the markets is that “all gaps eventually get filled.” This is probably true, though I’ve never tested it.
June 18, 2009, 1:53 pm
June 18, 2009
I’m with Tracey. I have called it the Slinky effect. Or in Investment jargon, Gap theory…all gaps get filled. (my belief)
Options In Focus: Net-Net It’s Logical
By CHRIS TYLER, Optionetics.com Analyst
Posted 02/03/2011 05:25 PM ET
According to Investor’s Business Daily’s own set of sell rules, this type of movement in shares is considered extended and makes a stock prone to profit-taking and perhaps even corrective action. As much and with attached gains of nearly 80% since channel construction began in August; I’d rather not wait to see whether or not the old Wall Street adage of “all gaps eventually get filled” becomes a reality in the immediate future.
Wall Street’s Thursday Lunch Options
Chris Tyler, Optionetics.com
February 3, 2011
Personally, if any initiating buyers were already “in it, to win it”, I can’t fault allocating a percentage of profits into a stock substitution strategy with a long call as premiums are now nicely i.e. very fairly priced on a relative trading range basis. For others though, I’d rather take the road less traveled than the prevailing high road north, hope it holds but find the adage of “all gaps eventually get filled” receive quick confirmation.
Microcap Stocks With Resilient Technicals
By Don Seal
Published: February 14, 2011 7:55:00 AM PST
Chartists say that all gaps eventually get filled, but this one is refusing to follow that reasoning.
New York City • Banking/Finance/Insurance • (2) Comments • Friday, February 25, 2011 • Permalink
In penny stocks, we love gaps! Thanks for sharing this informational article!
I have been investing in my own portfolio for over 20 years. And gap are like nature it can be good or bad depending on your position in the market.