Gaps in Mastercard and Fluor Are Being Filled

A lot of earnings gaps are being filled... gaps are a controversial subject in the technical trader world (of which I am loosely associated, although I am more of a fundamentalist) - BUT we have to respect charts and frankly the world looks a lot scarier without them, because all you see are stocks in free fall. I went many years without using charts when I first started and looking back now, I don't know how I did it - it seems completely foreign not to look at them at this point. The controversy of gaps comes with the question - do all gaps get filled? No, not all gaps get filled, but a good many do. Let me show you two stocks I have sold off at higher levels patiently waiting for their gaps to fill - both just filled them in the past 24 hours.

Fluor (FLR) @ mid $160s - FILLED!Mastercard (MA) @ low $240s - FILLED!

Now that is a positive step. However that does not mean this is "the bottom". Certainly I could see the way things are going: Fluor falls to its 200 day moving average of the mid $150s and Mastercard down to just under $220. Or maybe they stop here and reverse - but at least with technical charts you have some sort of roadmap. And I cannot stress that once again, this is simply not a buy and hold market. Even the best stocks eventually are being taken to the woodshed, and I'm not talking the cursory 5-10% correction that happens in long-winded bull market movements.

Mastercard, probably one of the safest fundamental stories in my universe, just dropped 25% in a matter of a few weeks. These are serious corrections that erase all your unrealized gains - in just a few sessions. No matter where you are hiding.

Hence I'd rather pay taxes (our last sale in MA was in early May right near $300) and lock in gains along the way instead of giving up all our gains and saying "hey no taxes if you buy this fund!" If we are in a bull market, we ride the trend and make less transactions. This is not a bull market (in case you did not get the news alert)

 Again, the one gap I am keeping my eye on is this one below - it would make me much more bullish if this one filled as it would signal complete "throwing in the towel"; but with the "tech is a safe haven" thesis, maybe it won't. Or maybe an earnings disappointment will be needed to do the trick. Or maybe it will "never" fill (I doubt it).

NOT SO FILLED![May 16: Fluor as a Wind Play? $1.8 Billion Says Yes][Apr 29: Mastercard Continues to Impress]

Long Fluor, Mastercard in fund; no personal position

Comments

[greencapita...:]

voww 220 might be a overkill. even 240 is an overkill for a 25% eps growth company and at 220, its 2009 valuation plunges to 18 or so. this is cheap than cheap.

at 220 and visa at 80 means visa is doubly expensive (at 40 times current earnings and 33 times 2009 one's). i dont think market will allow it to go 220.

today it rocketed up on heavy volume. i think 240 is a huge base and it will base around 260 to 280 or worst 250 to 270 and then rocket 75 points from there after a monster 35 to 40% beat (2.75 versus 2.03 expected).

matrader.blogspot.com

2008 Jul 08 09:48 PM

[User 223567:]

If the gaps needs to be filled why to gap up in the first place then...?
Foolish isnt it...? Oh yeah may be it will fill after two gap ups...

2008 Jul 08 11:13 PM

[pshah:]

Mark, so what is a good buy point for FLR? Do you think its better to wait for it to approach closer to the 200day MA?

2008 Jul 08 11:56 PM

[mozartom:]

...this info is worth a daily look, indeed.

2008 Jul 09 10:14 AM