THE FANTASY ISLAND REVERSAL

The island reversal is a powerful technical tool. However, the classic island reversal, where a stock gaps up to a new relative high but the subsequent session gaps down leaving a high below the prior days low, occurs infrequently. Even given decimalization, the pattern is likely to remain somewhat rare.

Hence, I created the Gilligan's Island in order to capture reversals in the spirit of the one-day island exhaustion pattern. The Gilligan's Island is explained in my first book, Hit and Run Trading. Essentially, it occurs when a stock gaps up to a 60 day high but closes poorly (in the bottom 25% of the range). Gilligan buy signals are a mirror image.