How to Identify and Trade a “Gift Gap”
Last week, we received a unique pattern that I call a “Gift Gap.”
It occurred on a company called Innovative Industrial Properties (IIPR).
Today, I’m going to explain what a “Gift Gap” is – and show you exactly how to profit off it.
Here’s the rundown…
Last week, IIPR dropped $18.79 (a 16.95% haircut) after its operating, investment and capital markets activity for the fourth quarter and the 2022 fiscal year was not met kindly on Wall Street.
As you probably know, Innovative Industrial Properties is the first and only real estate company on the New York Stock Exchange that’s focused on the regulated U.S. cannabis industry.
You’ll see below that last week’s drop created a massive gap in the chart.
This void from $110 down to $97.50 is what I call a “Gift Gap.”
Now, here’s the thing…
When it comes to gaps of this size and magnitude, they eventually get filled back in at some point.
When this “backfill” move happens, you want to be ready.
Because when a stock moves back up into a gap, there’s very little built-in resistance.
In other words, once a stock moves back into a gap, there’s no resistance to push it lower – which typically leads to a nice, tradeable upside recovery move.
I see it all the time.
If you’re patient enough to wait for the right moment, these “Gift Gaps” could result in big trading winners.
Looking specifically at IIPR, let’s break down how to play it…
YOUR ACTION PLAN
If Innovative Industrial Properties (NYSE: IIPR) can move back above $97.50, that would be the trigger to make a play on the “Gift Gap.” A move above $97.50 would push IIPR back into the void created by the big sell-off, which currently has no built-in resistance all the way up to $110. That’s a nice $13 move – which could certainly lead to a big intraday call play winner.
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