Lets play the SPX gap game and guess the end of year?
Taking a medium-term view (say, next six months), there are many gap opportunities to fill. (Please note also this is an analysis of SPX, not SPX500 which typically doesn't show many gaps as it is more fluid and constantly trading!)
Here is an old stat for you: From 2008 to late 2010, there wwere 116 "gap downs" on the SPX. On average, they took 21.5 trading days to fill - roughly a month of actual time.
~55% of the time, the gap down filled within 5 trading days.
~75% of the time, the gap down was filled within 10 trading days.
Now let's look at some of the big gap downs we have seen... and a few of the gap ups.
The most notable is the first one in the range of 3350-3250 (A) or so. While 3250 seems like a respectable upside limit, there is an argument for 3350 to fill that gap. However, if and/or when that fills, this would pretty much be near where things were before COVID. It is difficult to argue things are better than they were then, so there is some tremendous discounting going on. I don't know if we are going to fill it, but I think we will, and I think we fail and head lower after. This would also make a large double top looking chart, not a good way to set new highs.
However, our ascent has had many gap ups. One around 2300-2350 (B). Another which created an amazing island bottom in the 2500-2600 (C) range, a 2850-2900 (D) gap up and another recent 3120-3160 (E) ish. They're all still available to fill.
Therefore, my SPX short term target is a fill/high retest in the 3250-3400 (A) range. If this gap is filled, I think we will proceed filling the previous gaps in a painful downtrend back down towards the island gap area ("yellow future line"). I expect we will actually penetrate through but not retest the full low, instead only come down to 2300 (vs 2200) and bobble back to somewhere around the very long term trend line sitting int he 2550-2650 range. Again, this coincides nicely with (C).
Longer term views seem suggestive of trouble brewing: From 2018-2020, the monthly RSI continues making lower highs and there is the interesting convergence of the 50 month moving average sitting around this 2650 level as well. This seems like a reasonable year-end-target: 2650.
What might some catalysts be to cause this? The obvious COVID-resurgence, issues with vaccines,other major disaster taxing hospitals further, further social unrest amidst two questionable presidential candidates, china policy changes or trade wars, terrorist weaponization of covid or similar intentional spreadings, continued high unemployment, interest rate risks/possibly strengthening dollar, and of course, all of those swans we can't think of.
What do you think?
Here is an old stat for you: From 2008 to late 2010, there wwere 116 "gap downs" on the SPX. On average, they took 21.5 trading days to fill - roughly a month of actual time.
~55% of the time, the gap down filled within 5 trading days.
~75% of the time, the gap down was filled within 10 trading days.
Now let's look at some of the big gap downs we have seen... and a few of the gap ups.
The most notable is the first one in the range of 3350-3250 (A) or so. While 3250 seems like a respectable upside limit, there is an argument for 3350 to fill that gap. However, if and/or when that fills, this would pretty much be near where things were before COVID. It is difficult to argue things are better than they were then, so there is some tremendous discounting going on. I don't know if we are going to fill it, but I think we will, and I think we fail and head lower after. This would also make a large double top looking chart, not a good way to set new highs.
However, our ascent has had many gap ups. One around 2300-2350 (B). Another which created an amazing island bottom in the 2500-2600 (C) range, a 2850-2900 (D) gap up and another recent 3120-3160 (E) ish. They're all still available to fill.
Therefore, my SPX short term target is a fill/high retest in the 3250-3400 (A) range. If this gap is filled, I think we will proceed filling the previous gaps in a painful downtrend back down towards the island gap area ("yellow future line"). I expect we will actually penetrate through but not retest the full low, instead only come down to 2300 (vs 2200) and bobble back to somewhere around the very long term trend line sitting int he 2550-2650 range. Again, this coincides nicely with (C).
Longer term views seem suggestive of trouble brewing: From 2018-2020, the monthly RSI continues making lower highs and there is the interesting convergence of the 50 month moving average sitting around this 2650 level as well. This seems like a reasonable year-end-target: 2650.
What might some catalysts be to cause this? The obvious COVID-resurgence, issues with vaccines,other major disaster taxing hospitals further, further social unrest amidst two questionable presidential candidates, china policy changes or trade wars, terrorist weaponization of covid or similar intentional spreadings, continued high unemployment, interest rate risks/possibly strengthening dollar, and of course, all of those swans we can't think of.
What do you think?
Comment:
Well, now we have not only an island bottom area but as of now so far today, we have also an island top! how interesting. i'm guessing the range for the rest of the year will be now 3125-2575 - right in between both islands. it is interesting to note the midpoint of this range is 2850, which is where gap D is.
