A Quick Peek at the S&P and Russell Morning Pop

Sep 19, 2008: 9:48 AM CST

I wanted to show a quick snapshot of the S&P 500 and Russell 2000 indexes this morning following the massive overnight gap which is so far being faded but it would surprise me to no end if the entire gap was filled.  Let’s look:

S&P 500 Daily:

Whether or not ‘the technicals still work,’ we did have intraday resistance (so far) at the 50 day EMA temporarily, but the day is young.  We’re not that far from the August price highs but let’s keep our cool and not get overexcited at these developments.  Volume is reaching record levels and rightly so – there’s so much going on and so many people are affected.

The Russell 2000 actually almost surpassed its August highs intraday.

Russell 2000 Daily:

Finally, for a little fun, let’s look at the DIA 1-minute chart to see the massive gap ($6.00 – the actual Dow didn’t gap up that far, however) which the ‘gap fade’ model would tell us not to fade due to its size, but that is exactly what is occurring.

DIA (Dow Jones ETF) 1-minute fill:

Right now, we have a 50% fill of the gap (at $113) which would be an initial (or 1/2 position) exit under normal conditions, but there just aren’t that many large gaps of this nature to build a historical edge or gather historical insights to guide our trading decisions.

Be extremely careful and stay on your toes in this rapidly changing environment.

1 Comment

One Response to “A Quick Peek at the S&P and Russell Morning Pop”

  1. Man4urheart Says:

    You are the best!

    Clear and Crisp!

    I am really addicted to your analysis!