Google Inc's (GOOG) recent earnings report sent shares from a pre-earnings close of 533.44 to a post-earnings open of 498.35. After the post-earnings open, the stock continued to free fall, but that's a different matter. In this case, we want to focus on the close and open price, which in turn created a large downside gap in the stocks chart. See below for a visual example.



Above is an shot of the 20-day chart for GOOG. The earnings gap is highlighted with a white oval. Notice the action after the gap down. GOOG saw some continued selling, but has recently made a move back to gap bottom resistance at 500.

The stock is currently consolidating with support at approximately 485, and resistance at approximately 500. Should GOOG push above 500 resistance with above average volume, it is highly probable that the stock will continue further into the gap. Gaps act like magnets, and in GOOG's case the gap should pull shares back to the 530 level eventually.

A gap fill may come sooner than later if there is a bullish break of this consolidation resistance level. Bottom line is that you should definitely have an alert set at around 503 so you are notified if GOOG moves into the gap. It is also possible that GOOG extends further to the downside if it is unable to break and hold above 500 resistance.

Andy Swan is co-founder and head trader for DaytradeTeam.com. To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.