The down gap that keeps going

What the Lesson Covers

1. 0:00A stock opens far below where it closed, and spends the day proving it deserves to be there.
2. 0:06The shape. A range, a gap well beneath it, then a small range low down that never climbs. Wider and faster than the bullish mirror, because the news is usually worse.
3. 0:17Why it forms. Every holder has been repriced overnight without a chance to react. The opening range is that chance, and heavy volume in it means they are taking it.
4. 0:27The levels that matter. Yesterday's close at the top of the gap, the old range low, and the high and low of the first half-hour.
5. 0:37Where it completes. It completes below the opening range low. Above the opening range high, the gap overhead is empty, and empty space is why this failure moves so fast.
6. 0:48How often it follows through. Sixty to sixty-five, the lowest band here. A market that has already fallen hard has used up the supply that would slow a bounce.
7. 0:57The same shape failing. Here the lows get shallower, the opening high goes, and price travels back through the gap with nothing at all in the way.
8. 1:08The tells. Shallower lows each attempt, volume that builds on the recoveries, or a third of the gap back inside the first hour.
9. 1:18Ask what fell. A repriced business and a bad mood look identical here.