How investors reacts here will probably tell us more about the next move. The S&P 500 Index is nearing resistance and our upside target at 2,100. Monday's jump landed the SPY above resistance at 208 and the descending red trendline. In October, the S&P jumped over the 200-day simple moving average (this and another gap from Feb. Sometimes, upside gaps are signs of strength. The third criterion is an ex-post observation, so it can only serve as a confirmation after the first two requirements are met. High volume (especially crucial for bullish breakouts) Does not fill quickly. There are two types of gaps that traders look for when using this strategy: price gaps and volume gaps. Three main criteria of a breakaway gap: Gap out of a consolidating chart pattern. The idea behind the gap fill is to buy a stock that has gapped down (or up) on high volume and then selling it once it fills the gap. Gaps signal market strength and weakness, respectively. The gap fill is a popular trading strategy among stock investors. The reverse is true for a falling market. In a rising market, a gap occurs when prices open at a higher level than the previous session's high and do not trade lower to fill the space. ![]() The track record of upside gaps being filled is not as stellar as that of downside gaps being filled. A gap is simply a price level where a market does not trade. The S&P essentially filled one gap with another gap (almost sounds like a European bailout strategy). For instance, in the currencies market, they usually happen on opening following the weekend or whenever there is a big announcement while in stocks, gaps are. This is a very intriguing gap, because it closed the June 29 gap, but left a new gap to the down side. Price must retrace all the way to the closing price of the previous day before the gap. Monday morning, the S&P 500 gapped higher (see chart). A gap on a chart is considered to be filled when the price action moves back through the open gap area where transactions were missing. The open gaps at 2,081 and 2,101 could be targets (and potential opportunities to go short)." The odds for a bounce are good as long as trade stays above 2,040. ![]() ![]() I noted via the July 8 Profit Radar Report that: "Today's decline may have exhausted selling, at least temporarily. Although stocks were down, there were at least two gaps to be filled. The first of many recent S&P 500 gaps lower happened on June 29, when Grexit fears first re-emerged. Start with the words you know and tick them off so you know which ones youve used. If the words aren’t in a box, be careful with your spelling. Careful Sometimes there are more words than gaps. In my humble opinion, the most reliable indicator for major market tops (it got the 1987, 20 tops right) also gave no sell signal. Read the text carefully before and after the gap to help you choose the right word. 22 at S&P 2,010 (SPY: 200.7), and this gap suggested the S&P will came back up. But they weren't aware of the open gap from Sept. 15 and 16, headlines like this popped up: " This is the most dangerous stock market since 2008" and " Buyers beware, the bear market has begun." Gaps are nothing but Price of a Stock moving up and down sharply with no or little trading happening between the previous days close and current days open. 15, the S&P 500 lost 9.9% (the largest correction since 2012). There have been many times in the past few years where market pros predicted an immediate collapse, but chart gaps near the all-time high said the S&P 500 will come back up to close that gap. In fact, every single downside gap since the beginning of the bull market has been filled. The market appears to consider them unfinished business. ![]() Price Action: Since this strategy is a technical momentum play, traders will study charts and technical indicators such as breaches for previous days high or how the stock is behaving relative to its premarket range.Simply because gaps tend to get filled. The volume can be compared to the float, outstanding shares or the average daily volume to get a sense of the relative volume behind the move. Volume: Technical traders will also analyze the volume behind the move. Are you a beginner in the stock market and and confused by the term 'gap fill' When I was a beginner to the stock market and just getting started I remember. The larger the gap, the less chance of it filling by subsequent price movement. You can use the market chameleon press release scanner to quickly find if the company issues a press release to the investment community. Not all stocks covered the entire period. News: They will check if there is a news catalyst that supports the stock price behavior. The gap and go list helps point to the price action but traders will then focus on other tools and data to help them make a trading decision. The trader will try to profit from an anticipated larger move following the gap. The gap and go strategy is considered a pure momentum play.
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