Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Gap Up....No Gains After The Open...

Stock-Markets / Stock Markets 2014 Jul 15, 2014 - 09:44 AM GMT

By: Jack_Steiman


It was a surprise to see the market gap up today, and an even bigger surprise to see it simply die after the open, since the gap up was pretty powerful in terms of price. Normally, after such a decent gap up, you run up all day and close at or near the highs for the day. In this tough environment which is on a sell signal related to froth, it's not easy to get a strong follow-through to the upside. It would be no shock if the market reversed down tomorrow. When looking at today's action, the bulls have to be happy they created an open upward gap, but unhappy about what took place once the gap up occurred.

It was a mixed day, even though the tape was higher. The problem the bulls were dealing with today is exactly the same problem for the bears. Dry buying versus the previous pullback, which saw dry selling. No volume on these gap ups to take things either higher on gap ups or lower on gap downs. It takes very little effort by either side to hold the charge after the gap open. So when summing it all up for today's action, I'd say the bulls came out slightly ahead, because they did create a gap up. They really shouldn't be celebrating, though, because the gap up simply died right at the open. Neutral behavior. Neither side showing what it takes to get the job down for now.

Lots of leaders didn't lead. The market really took its cue from the earnings from the likes of Citigroup Inc. (C), a major financial stock. This gave all the financial stocks a big boost once the market opened for trading. Many other leading sectors did not participate today. Not only that, all the financial stocks fell well off their highs, many printing black candles, meaning they closed below their open gap-up price, which is nothing to get excited about if you're a bull. Again, gap and run is what you want, but we got gap up and stall with a slow erosion in those stocks. So even the best of the best couldn't get rocking after the open, and that's why the market itself couldn't get blasting after the gap up.

When markets gap up strongly you want to see a big explosion in the leaders causing the gap. Once that doesn't occur in the first thirty to sixty minutes it usually means the party is over, which can happen when there's simply too much froth around. You don't know that for sure, but clearly, it can be seen as the excuse. Where are the buyers left to come in and take it up once it opens? Not many new bulls around with the spread at 45.5%. In powerful points of a bull market you get the gap up. Then those who missed the move come charging in, which brings the price higher, which then gets the bears to cover, and, thus, even higher still. The part of the equation is now missing. Today's lack of leadership could be a message that says easy does it. But we already know that's the way it is here with froth so extremely elevated.

Sadly, market conditions are such that playing heavily on either side of the coin makes little sense. When that happens folks get bored, and boredom frequently leads to bad trades. So please make a mental note to take it easy in terms of over playing intraday. It really doesn't work for the most part. The market is trading between the recent highs from which we have pulled back from, and the 20- and 50-day exponential moving averages below. There's not a lot going on, so until we break out above price, or below those 50's, it's a market of noise with nothing really going on, including today's upside sticks. Very little playing, and lots of cash, still makes the most sense, including not chasing strength. If you have to buy or sell, wait for strength or weakness first.

Do what feels right to you, of course, but that would be my best advice for now.



Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Sign up for a Free 15-Day Trial to!

© 2014

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in