Earnings Gaps

How stocks gap up or down after reports, three real examples with very different outcomes, and the clues that help separate gaps that hold from gaps that fade.

Why earnings create gaps

Because most reports come out when the regular session is closed, the market’s reaction builds up overnight. When trading opens, the stock can start far above or below the previous close, leaving a gap on the chart. Earnings gaps are among the largest single-day moves most stocks make all year.

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