Dictionary of Finance and Investment Terms: price gap
price gap
term used when a stock's price either jumps or plummets from its last trading range without overlapping that trading range. For instance, a stock might shoot up from a closing price of $20 a share, marking the high point of an $18–$20 trading range for that day, and begin trading in a $22–$24 range the next day on the news of a takeover bid. Or a company that reports lower than expected earnings might drop from the $18–$20 range to the $13–$15 range without ever trading at intervening prices. Price gaps are considered significant movements by technical analysts, who note them on charts, because such gaps are often indications of an overbought or oversold position.
