ON THE SUBJECT OF GAPS AND TRAPS
Traders are gap happy. By that I mean that every trader out there sees the enormous gaps down below in the major averages and figures that they have to be retraced here. That means that as soon as we start selling off, everyone will jump on the gap retracement bandwagon and the gap retracement simply won't happen.
Those gaps below the market are a liability to the bears here as they are a glaringly obvious technical gravitation point that will inevitably destroy those who try to take advantage of it before it actually retraces.
Of course, next week the Europeans could drop the ball again and we simply gap down right through the gaps before anyone can take advantage. If we do retrace those gaps quickly, as almost everyone expects, then that will probably how we do it.
Do not, however, expect a clean retracement of both gaps, followed by a rally back up. That's ABC market behavior from years ago. Throw away your old textbooks about the market. None of them apply any longer.
