S&P Open Gap at 905 & 1016

[postalmatt]

Below you talk about the open gap at 1016. What about the open gap at 905 on 7/14/09? When will this gap get closed?


The S&P 500 is in a bull market and the 20-day EMA has held so far, but seeing a little bounce here is not unusual, even if it fails in the coming days. The overhead resistance remains a factor and the S&P is closer to it than support - meaning there is a lot of room on the downside still, even if we do stay within the trading channel.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

If I say it, it is almost a guarantee that it won't happen this way, but if we can see the S&P 500 pull back enough in the coming days to fill the open gap at 1016, and the 50-day EMA moves up toward 1016 (currently 1013 and rising), and the rising trading channel support line also hits that area, it will certainly be a great looking spot to be a buyer. And it will be a very nice risk reward play because if the S&P moves below those levels, it's an easy sell signal. So, you'd have a great buying opportunity or else, you'd be out quickly.

 

[JTH]

Below you talk about the open gap at 1016. What about the open gap at 905 on 7/14/09? When will this gap get closed?

Hi Postalmatt, welcome to the forum!

I'm a doomer myself and do believe this gap will be filled, but when? Could be years from now, could be within 6 months. While it is true the majority of gaps gets filled, it's also true some gaps never get filled.

 

[CapeChem]

so when does one accept that a gap will not be filled? is it time or once the market has moved a certain distance from the gap?

 

[JTH]

so when does one accept that a gap will not be filled? is it time or once the market has moved a certain distance from the gap?

It can be argued if you look far enough out all gaps eventually get filled. However if you're trading based on this strategy you're likely to get beat by the market, especially given TSP's limitations.

I don't have a definitive answer for you, but when I want to learn about gaps, I turn to Rob Hanna whose Quantifiable Edges blog gives great statistical analysis.

 

[Frixxxx]

I believe one gives up on a gap once the trend has surpassed it.

Trending is not as smooth as one thinks. However,

my 905 fill prediction is 14 Nov.....which will take care of the 1016:suspicious:

But then again, I only caught 22% since March, so I can't pick them all!

 

[tsptalk]

Welcome postalmatt! Good question.

The vast majority of gaps eventually get filled. 905 is no exception so as others have said, the question is not if, but when.

Right now 1016 is in my sights and I'll address the 905 gap as we get closer - and I'll assume we will, eventually.

 

[CapeChem]

thanks guys

 

[postalmatt]

Thanks for the replies.