Mind the Gap

Vincent Catalano
Vincent Catalano • by Vinny Catalano, CFA
Chief Markets Strategist, Stuyvesant Capital Management •

It's worth keeping in mind the gap that yesterday's stock market plunge produced and that gaps are made to be filled. If so, then the S&P 500 would have to rise to roughly 2914 (its Aug. 2 low) to fill that gap.

I'm not a big pattern recognition guy (head and shoulders tops and bottoms, flags and pennants, cups and handles, etc.), but there are more than a few who are. Therefore, it's worth keeping in mind the gap that yesterday's stock market plunge produced (see arrow in chart below) and the market technicians rule of thumb that gaps are made to be filled.

If so, then the S&P 500 would have to rise to roughly 2914 (its Aug. 2 low) to fill that gap. You don't have to be a fan of something (as I am not of pattern recognition) to appreciate that others are and will act accordingly.
 

 

Disclosure:

Accounts managed by Blue Marble Research may presently hold a long/short position in the above mentioned issues and their inverse comparables.

STOCKS IN THIS ARTICLE

SPX
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