ABSTRACT
Gaps on daily charts are produced when the lowest price at which a certain stock is traded on any one day is higher than the highest price at which it was traded on the preceding day. When the ranges of any two such days are plotted, they will not overlap or touch the same horizontal level on the chart. There will be a price gap between them. For a gap to develop on a weekly chart, it is necessary that the lowest price recorded at any time in one week be higher than the highest recorded during any day of the preceding week. This can happen, of course, and does, but for obvious reasons not as often as daily gaps. Monthly chart gaps are rare in actively traded issues; their occurrence is confined almost entirely to those few instances where a Panic Decline commences just before the end of a month and continues through the first part of the succeeding month.
