I'd like to share with
you one of my favorite stock trading tips: Sell positions and lock in
profits on "lonely gaps".

I know what you're thinking, "Andy, what the heck
are you talking about? What is a lonely gap? Sounds like something you made up."

Well, yes--I did make up the term "lonely gap."
See, a gap open occurs when a stock opens at a price significantly different
than it closed at on the previous trading day, leaving a space (gap) when you
look at the chart. A lonely gap occurs when the stock is gapping up without the
help of the overall market. In other words, the stock is gapping up all by
itself and without the conviction of the broader market to sustain the move
(note that this is best used on stocks that do not have MAJOR news events
driving the gap).

For an example, let's take a look at the trade of
Flextronics ( FLEX | Quote | Chart | News | PowerRating) that we just exited for a nice profit on Monday in the
DaytradeTeam Small Cap Swing Trading System:

On the chart, you'll notice that on Monday
morning, FLEX opened significantly higher than it closed last Friday, creating a
gap up on the chart. In addition, this was a lonely gap, because the Nasdaq and
SP broader markets were only slightly higher at the open and starting to sell
off just a few minutes into the trading day.

This made us hit the sell button very quickly. We
locked in a profit of almost 5% in just a few days, with the bulk of the gains
coming on the overnight move. After selling, we watched with pride as the stock
fell 30 cents through the day to close at 10.85, happy that we took the gift
given to us by the lonely gap.

Want to learn my stock trading strategies and
profit from my real time trading alerts? Start a trial membership to
DaytradeTeam right now!