Gap-Fill Looms Ahead as Stocks Gap Higher

How to trade the start of this holiday-shortened week.

Technical Edge — 

• NYSE Breadth: 58% Upside Volume

• NASDAQ Breadth: 77% Upside Volume 

• VIX: ~$30.50

Stay nimble and remember that not every session is suitable for trading. Our No. 1 goal as traders — particularly in this environment — is to protect our capital! 

Remember this mantra and say it out loud: No edge = No trade. 

Game Plan — S&P 500 (ES and SPY), Bitcoin, ARKK.

Another day, another gap-up. 

S&P 500 — ES 

For all intents and purposes, we have an inside-doji-and-up setup playing out right now. However, coming into the session +60 does not do traders much of a favor — if anything, it leaves them susceptible to a fade. 

I see two keys to today’s session: Friday’s high and the 3725 to 3735 zone. 

If we can’t stay above Friday’s high (at ~3713), then 3700 remains vulnerable. Below 3700 and we can see the 3670s. 

Above 3713 leaves us in a daily-up state and keeps the 3625 to 3635 zone in play, which was support for most of last week. Reclaiming prior support is paramount for the bulls. Turning it into resistance is paramount for the bears. 

If the market clears this battleground spot, it puts 3750 in play — the Globex high. Above 3750 and 3800 to 3830 is in play, along with the 10-day moving average.

S&P 500 — SPY

We threaded the needle on Friday with the SPY, saying that it’s likely we’ll lose the gap-up gains and could eventually see the $362 to $362.50 area. 

The SPY hit $362.17, bounced and gave us a doji candle on the close, and is now going daily-up in the pre-market.

On the upside, keep an eye on the $372.12 area. We are about $1 away from that mark in the pre-market, so any sort of opening surge could send us to this area. If we fill the gap, look at it as a potential “Job Well Done” for the market and see if this acts as a pivot area to the downside. 

If the SPY can gain traction over $372 this week, $380 could be in play. Otherwise, a gap-fill and fade is very possible. 

Bitcoin