SPX Daily Chart from 2008 Assessing the Impact of Gap Fills on Current Trading

Keystone was looking for the gap fill at 1360 last week, which occurred. This gap is from when the SPX topped in 2011 at 1363-1370. The SPX has still not closed higher than the 2011 closing high or intraday HOD for 2011. Nonetheless, on Friday, the SPX filled the gap at 1360 in 2011. Thus, since all the gaps are now filled going back to 2011, the charts have to be referenced back further to see if there are additional gaps that can serve as upside targets for the SPX. This task takes us back to May-June of 2008, before the epic Fall 2008 Crash.

The only area of interest is the blue box, ignore the rest of the chart. A stunning revelation is apparent right away. Look at how no gaps exist between where price fell from 1425-ish down to 1350. Thus, after the 1360 gap fill occurred on Friday which satisfied the gap from 2011, the only other gap that exists is a tiny gap at 1425 from 2008. The reason this is important is that typically gaps can provide upside targets since they serve as magnet areas for price. Price always wants to fill gaps remaining open whether or not they are above or below the current price.

So for the SPX moving forward, there are no gaps to fill, until 1425 which is over 60 handles higher, which is not so much an area of intererst currently, especially after this bull rally that is reaching exhaustion. In other words, as far as gap fills go, the fill at 1360 on Friday satisfied the SPX, closing out the unfinished business at 1360, which is bear favorable since there are no other gap fills above, until the 1425 gap comes into play as some time in the future. The 1360 gap fill Friday now allows the SPX to move lower without any unfinished business concerning gaps holding it back. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.