Does today's gap up on SWC look like an exhaustion gap?

Creezy answered one year ago …

Possibly.

Positives:

The price volume action looks extremely bullish.
The gap higher is a continuation pattern. It will likely close which means we probably see a pullback to $16.25 or so.At least we know if it breaks $16, it's most likely a reversal lower.
The RSI hasn't yet reversed back below 70

Negatives:

There is strong historic resistance at this level (in 2004 & 2006). Sure if it breaks that resistance it's very bullish. But I don't like to anticipate, but just take what we know today.

COMMENTS:

I personally would sell ca

I certainly wouldn't be a new buyer here. I can show you charts like this every day that - if you saw the pop real time - would tempt you to get in too. But this happens all the time. I would rather stay out and watch it triple than get in here. But that's me. It's not worth the risk. But if I owned it, it's not quite time to sell. Wait to see if after the gap closes, if the stock contginues any lower (than about $16.00). Also wait for the RSI to move lower than 70. (Compare the historic RSI to historic moves like this. look at a daily 5 year chart with the RSI.)

I do like the volume behind this move which makes it a bit different than the past. but the historic resistance is going to be a heavy block to lift.

Remember (regarding other resistance found in early 07 at $16) old (broken) resistance acts as new support in a healthy move. If $16 doesn't hold, it's definitely time to hop out.

You can collect an extra $1.50 / share by selling (writing) the March 17.50 calls. That's the smartest move you can probably make here. Buy them back cheaper on a pullback. The stock more than likely has to at least pause here.

If you are bullish on it but don't own it, and you absolutely MUST get in and can't resist - then I recommend you sell the naked puts. Sell the March 17.50 put to open. At least if the stock is put to you you will own it at 17.50 - the collected premium (about 1.80 now) .