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We have been looking at this idea that since Tuesday’s huge move higher, the SPY could easily move back down for a gap-fill. We came close to seeing it yesterday, but not quite. Today, again, we are seeing consolidation of the big gains from earlier in the week. Unlike yesterday, more stocks seem to be following the broad market and taking a break here, instead of squeezing shorts violently across the board. Indeed, we saw a similar pattern last week, with a huge opening morning gap higher on a Tuesday, followed by consolidation the rest of the week.
As the session progresses today, I am on watch for a complete gap-fill. Recall that most gaps do, in fact, commonly get filled, which is why they are referred to as “common gaps.” I am encouraged by the action in several of my longs, and I have yet to see much evidence that the bears are finally waking up in 2012. We are seeing some signs of improvement in this market, but remember that if we are on the cusp of a sustained uptrend then by definition there will be time to get in with size and play along.
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chess stop this nonsense youre killin me, no wait keep puttin em up