Exhaustion Gap May Signal a Top

The market's jump in response to political news last Wednesday was more unusual than most recognized. It was not the size of the advance but the character of the day that I find important. 

The upward gap between Tuesday's close and Wednesday's open was huge, and then the subsequent action was on heavy volume and produced, as we see on the first chart, a very square entry on the Candlevolume chart. In fact, I went back in history and could find no other Dow industrials gap as large in the last 30 years, at least. That made the entry look suspiciously like an exhaustion gap, which, at least in individual stocks, is a sign of an important top. So the subsequent action, drifting downward on lighter trading and small trading ranges, starts to look like the beginning of a larger decline. ...199 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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