While the S&Ps continue to trade within a 8-month Balance - they are 1-timeframing up on a monthly basis - see graphic above. The Weekly Chart below shows the same.
Last week - when the S&P's closed below the 1375-76 area, I viewed it as a breakout failure and thought the destination trade would be the 1320 area. However, what I failed to take into account was that the monthly trend was up - Aug took out July Highs. Also, the weekly bar showed the S&Ps 1-timeframing up. This shows the importance of always keeping an eye on the Monthly/Weekly bar charts during the week to keep a longer term perspective.
Back-to-back gaps are unusual in Equities; when double gaps do occur the correction, very often, has a dynamic conclusion with a final rapid rise followed by a break. Perhaps, that is what we witnessed last week. Thursday - was an excess low followed by large Gap higher on Friday. The cessation of a directional one-timeframing mode is, very often, the beginning of a reversal. Gaps are also frequently the precursor of a more significant, directional auction. An Excess Low followed by a Gap is the most potent combination for reversal.
Following a gap, which is usually considered excess, markets
mostly sprint higher. Friday's POC is very prominent and Friday's high was poor. For Monday, I will be looking for higher to overlapping higher Value. The 1400 level is a key psychological level and may act as resistance. 1384.50 was the afternoon Pullback Low and is a key reference / support to the downside.
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