Hello Marty, I started to DM you but then I thought others may have the same question so I'll ask it here. I have a naturally bearish nature towards the stock market and when I see a stock like UPST gap up and take off like it does my first thought is.....wow, look at that big gap up it's got to come back and fill! What are your thoughts on gap ups and back and fills?
You can DM me anytime... I am sure many folks are interested in UPST; for good reason.
The gap to fill you are referencing is from the high of Tuesday at $140.61. The stock opened on Wednesday much higher, and created a gap between the Tuesday high of $140.61 and the Wednesday low of $156.77. the stock closed Friday at $203.29. That is quite a gap, and the question is; will the stock return to fill that gap?
Most gaps in stock prices will be filled eventually. But, this one may take a long time. I say that because of the massive volume that we see in the blue volume bars on Wednesday, Thursday and even Friday. Those are the footprints of large institutions buying this stock, and when they buy it is not for a quick trade. They plan to hold. I would even go as far to say that they will be back to buy more.
Take a look at the weekly chart, and we can see this stock is making higher lows, and is in a clear uptrend. UPST formed a base for 12 weeks before the move last week and is sitting near a buy point of $191.89.
I included a 5-minute chart as it illustrates the massive gap higher, and the constant buying of this stock for three days. It is pretty incredible to see that type of move in a stock.
I would say this stock is likely to trade higher in the coming weeks/months, and that gap will not be filled until the market is in a correction.
On another topic. I can understand why you would be "naturally bearish" on the markets right now as we wedge higher in lighter volume. I would embrace a correction as it allows us to buy more stock at lower prices. I am seeing quite a few bullish setups this weekend, and the IPO stocks are being bought which tells us the institutions are will to buy more riskier assets, and that is not a bearish sign. But, that is what makes a market!
Have a great evening!