What's An Island Reversal?


If you like fun in the sun you’re bound to love this next post. It’s all about an island reversal. Wait! What the heck is an island reversal?

Although it might remind you of St. Thomas the term island reversal has nothing to do with the Caribbean. It’s a term from finance that’s used even when the beach is nowhere in sight.

An island reversal indicates a pattern in a stock’s chart. Specifically, island reversals are isolated data points separated by gaps.

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S&P 500

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Trader disclosure: On Sept. 28, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (JWN), (INTC), (EMC); Najarian Owns (KSS); Najarian Owns (GS) Options; Finerman Owns (GS); Finerman's Firm And Finerman Own (FLS), (KALU), Finerman's Firm Owns (JNJ), (KFT), (TGT), (WMT), (NMX), (NDAQ), (COP); Finerman's Firm Owns Daimler Chrysler; Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts