Loading ...Some Thoughts on Gaps and The Current Stock Market
As technicians and chartists, we know the adage that Gaps usually get filled. I have stated in the past (maybe not on this forum) that gaps are more likely to be filled in individual stocks as opposed to indices or derivatives (ETF’s, options, etc.) My experience is that with the exception of takeover deals and bankruptcies, most gaps do eventually get filled in individual stocks. The current stock market indicies present an immediate case that should be quite interesting. Most indicies (see SPX chart below) gapped down dramatically last Thursday morning on the market opening. Although we are going to have an up gap this morning I don’t expect last week’s gap to be completely filled. Not just because it is an index and not an individual stock, but because last Thursday’s down gap was also correcting and filling the previous up gap from the week before. I believe today’s opening gap will prove an opportunity to sell and go short the major market averages like the SPX. Whether a drop turns out to be the start of a major correction or just a modest pullback before going higher and eventually filling the gap, I am not sure. Either way, I believe a move to the downside is a tradeable play at this time. 
Looks like an abandoned island top. Lets see whether it stays abandoned.
What I like here is that we may be at an inflection point for Silver & Gold. Gold is chopping and Silver looks like it is ready to resume leading higher. What we want to see to confirm, is the stock market pulls back and the precious led by Silver rallies strong!
Amen to that CM. What are the chances the markets pull back before elections with trillions flooding them?
This call for a stock market pullback is short term, rest of June and maybe July. I would not be surprised with a final leg up into the election. If I am right about gold and silver starting to de-couple from the stock market, they can continue higher regardless of the equities.