IWM Gap

The IWM gap that I’ve been talking about recently finally did manage to stop the market after all. The IWM surged above the top of the gap today, but was unable to close the deal. See the blue box on the long-term chart (click to enlarge):

If the IWM can eventually fill the October 6th gap, the next major milestone will be the TARP gap (green box). Also, there was an exhaustion gap on 9/19/08 (purple box). I don’t regard that gap as significant because there would be resistance at those peaks anyway. However, I found it interesting that the IWM’s inverted head-and-shoulders pattern projects right to the center of that gap.

The October 6th gap was seriously weakened today, so the next time the IWM heads above 62, it is likely to stick.

(Note: the blue box shows the top of the gap according to the daily chart which uses “corrected” data. Looking at the intra-day chart, the IWM closed lower on October 6th, at 62.03, which is why I said that it traded above the gap today. I use the close shown on the intra-day chart for gaps.)

This entry was posted on Thursday, September 17th, 2009 at 7:50 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.