After the most recent gap-up in this two-week rally last Thursday, our goal was to objectively ascertain exactly how the market would react to a variety of unfilled gaps left below. Thus far, the market is almost assuredly backing and filling in a shallow manner without too much price giveback.
Turning to the 30-minute chart of the QQQ ETF, you can see the high growth names in the Nasdaq-100 have gone sideways since Thursday to work off any short-term overbought conditions in lieu of a price correction. While this morning’s gap higher represents a “throw over” from the consolidation, we have yet to see the bears really assert themselves with a fast move lower.
We can only analyze the action before our eyes. With many traders seemingly looking, and positioned, for a significant higher low down from here or an outright rollover, I am strongly considering more of this type of shallow backing and filling action.
Keep an eye on the 30-minute timeframes of the major indices and their ETFs for the market’s verdict.
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