Gap Up with Volume: When Overnight News Actually Sticks

The setup

The stock opens at least 2% above yesterday's high — not just yesterday's close — on the back of results, an order win, an upgrade, whatever. Volume runs 1.5× normal, and critically, the price holds the gap into the close rather than fading.

Why it works

A gap is the market repricing a stock while it slept. The question is whether real money endorses the new price. A gap that holds all day on heavy volume means institutions accepted the repricing and kept buying — those often start multi-day marks-up. A gap that fades and fills was retail enthusiasm meeting professional selling.

Our scanner's rules

• Open ≥ 1.02 × yesterday's high; close above the open (the gap held); volume ≥1.5× the 20-day average.
• Entry: the close. Stop: yesterday's close — a full gap-fill invalidates the entire move; the market has rejected the repricing. Target: 1.5R (this is a fast trade, not a marriage).
• Bigger gaps and fatter volume ratios raise confidence.

Common mistakes

• Buying the open. The scanner deliberately waits for the close because morning gaps fade constantly; the hold *is* the signal.
• Trading gaps on no news in illiquid names — those are frequently games being played on you.
• Holding through the gap-fill "because the news was good." Price rejecting good news is the most bearish tell there is.

Volume context: the truth serum. Today's gaps: Strategies page.