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Gaps in SP futures


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#1 crestdorf

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Posted 17 February 2007 - 11:05 AM

Gaps in SP futures, the gap left between the close, or as I measure it, the high of the last bar of the day using 5 min bars, of the previous day and the open/ low of the first 5 min bar the next am, are often filled within the first hour of trade. When they are not it is generally significant for the interday trader. When there occurs 2 gaps in two consecutive days, in the same direction, and the second gap is not filled the next day; this is a rare event! Perhaps that is in tech analisis a breakaway gap, I'm not sure. Nonetheless, the last time this occured (over the 17 years as a SP trader, I couldn't tell you how many times this has occurred...sorry, memory is shot for details but I'd guess less than 10 times) it was significant. See 8/15, 8/16 2006. On a interday chart, those gaps have not been filled. Since, the market began its "let's relive" the end of 94 and early 95 again theme. Obviously, there are hundreds of differences between now and then, some glaring some subtle. Still, this game is about noticing signifigant events. This market has given us plenty recently. Another one which for me is quite significant occurred last week. (Oh. Expiry doesn't matter in this case, two unfilled gaps in SPs in same direction is still a big statement. So what do you do with this silly trivia as a speculator? There are some interesting interday chart patterns in the SPs currently which tells me if we breach the highs tuesday and hold them through the first hour, Dow 13k will come quick and if another few days pass and the floor boys cannot fill one or both those gaps, the SP's are going to look like 1995's twin and we will soon see a test of SPX all time highs. Or, Tuesday we gap up over the highs and run into the first hour or a bit more and then start selling and don't stop till both those gaps are filled down below all in one day:) THE correction is upon us. Either way I will be betting, the market will show its hand Tuesday and there will be alot of cash to be made by being patient and then when she tips her hand, going with the flow. OR, we gap down, don't fill the gap and sell and sell and sell. Expect Tuesday to be a large range day going with the flow can make yer month.

#2 S.I.M.O.N.

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Posted 17 February 2007 - 01:18 PM

Here's what i found interesting about yesterday and last thursday. Last thursday the mkt gapped down and grinded higher to close top tick and yesterday was a carbon copy, gap down and grind higher for a top tick close, so my bet would be on the horse named Korekson. if the mkt gaps up on tuesday, look out below. :)
*previously known as pnfwave

#3 bliss just missed

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Posted 17 February 2007 - 08:49 PM

Here's what i found interesting about yesterday and last thursday.
Last thursday the mkt gapped down and grinded higher to close top tick and yesterday was a carbon copy,
gap down and grind higher for a top tick close, so my bet would be on the horse named Korekson.
if the mkt gaps up on tuesday, look out below. :)

In all due respect, I'm not sure how much emphasis you can put on one trading day. And for that matter, gaps. There is a gap at the 1200 level I believe from late 2005......250 points away!!!! I believe we're stuck in a trading range for a few weeks with each week grinding higher in the short term. As for what tomorrow is going to bring, ain't got a clue!!

#4 crestdorf

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Posted 17 February 2007 - 09:43 PM

Here's what i found interesting about yesterday and last thursday.
Last thursday the mkt gapped down and grinded higher to close top tick and yesterday was a carbon copy,
gap down and grind higher for a top tick close, so my bet would be on the horse named Korekson.
if the mkt gaps up on tuesday, look out below. :)

In all due respect, I'm not sure how much emphasis you can put on one trading day. And for that matter, gaps. There is a gap at the 1200 level I believe from late 2005......250 points away!!!! I believe we're stuck in a trading range for a few weeks with each week grinding higher in the short term. As for what tomorrow is going to bring, ain't got a clue!!

Indeed, there are quite a number of unfilled gaps below. Not filling them before rising further has a message for the interday trader. My point though, which I may not have articulated well, is it is extremely rare for price to gap in the same direction 2 days in a row and not fill the second gap quickly that day. FWIW, the 2nd gap is filled within the first hour 90% of the time, and the % is higher later in the day. Not filling two gaps is actually quite significant. There are many reasons underlying this "pressure" in the market which over powers the floor traders habitual fade behaviour. I believe we HAVE been in a trading range, but it is soon to change based on this very rare clue.