Gaps occur because of underlying fundamental or technical factors. For example, if a company's earnings are much higher than expected, the company's stock may gap up the next day. ... Similarly, a stock breaking a new high in the current session may open higher in the next session, thus gapping up for technical reasons.

Is it good if a stock gaps up?

Increases in volume for stocks gapping up or down is a strong indication of continued movement in the same direction of the gap. A gapping stock that crosses above resistance levels provides reliable entry signals. Similarly, a short position would be signaled by a stock whose gap down fails support levels.

What does a gap up indicate?

Gap-up: When the price of a financial instrument opens higher than the previous day's price, it is gap-up. ... Partial gap-down: A partial gap down in stock market occurs when the opening price is below the previous closing price, but not below previous day's low.