Here's a daily chart for SPY (Tracking ETF for the SP500): [IMG]...

Here's a daily chart for SPY (Tracking ETF for the SP500):



We've had several types of gaps in this rebound.

A run-away gap early in the trend - that suggested this run would have long legs.

Then a couple of continuation gaps.

The question now is - Is this an exhaustion gap - or just another continuation gap?

Several factors suggest this is an exhaustion hap.

This run is getting long in the tooth. It is overbought with an RSI.9 >70. The candle is a hang-man. That sometimes signals the end of a trend.

Volume isn't as high as I'd like for this to be an exhaustion gap, but compared to most days seen in the past 100 Trading Days - it is quite high. It is only low relative to the volumes seen at the end of the correction.

It seems unlikely that the first day of the new month (Monday) would be a serious down day - lots of new money to be put to work by fund managers.

But if we see a big down day on Tuesday or Wednesday - we may be in for a serious pullback.

Redbacka