SPDR S&P 500 ETF TRUSTEducation
What do Gaps tell us?
Gaps typically occur when a piece of news or an event causes a flood of buyers or sellers into the security. It results in the price opening being significantly higher or lower than the previous day’s closing price. Depending on the kind of gap, it could indicate either the start of a new trend or a reversal of a previous trend. (Investopedia)
My Observation:
Now if we compare the most recent Gaps in the past 2 months, we see Gaps became more frequent and their size increased significantly relative to the previous bullish trend!
Moreover, we did not have a Single bearish gap between Oct 5th and Nov 22, while we have had 5 Bearish down gaps afterward!
What Is Volatility?
Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. Volatility is often measured as either the standard deviation or variance between returns from that same security or market index.
In the securities markets, volatility is often associated with big swings in either direction. For example, when the stock market rises and falls more than one percent over a sustained period of time, it is called a "volatile" market. An asset's volatility is a key factor when pricing options contracts. (Investopedia)
Based on these observations, it is highly likely we see more correction ahead.
Your emotions will kill your capital, try to stay calm and act based on plan!
Jim Simons:
When everyone is running around like a chicken with its head cut off, that's pretty good for us.”
Reference:
https://www.investopedia.com/terms/g/gap.asp
https://www.investopedia.com/terms/v/volatility.asp
My Observation:
Now if we compare the most recent Gaps in the past 2 months, we see Gaps became more frequent and their size increased significantly relative to the previous bullish trend!
Moreover, we did not have a Single bearish gap between Oct 5th and Nov 22, while we have had 5 Bearish down gaps afterward!
What Is Volatility?
Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. Volatility is often measured as either the standard deviation or variance between returns from that same security or market index.
In the securities markets, volatility is often associated with big swings in either direction. For example, when the stock market rises and falls more than one percent over a sustained period of time, it is called a "volatile" market. An asset's volatility is a key factor when pricing options contracts. (Investopedia)
Based on these observations, it is highly likely we see more correction ahead.
Your emotions will kill your capital, try to stay calm and act based on plan!
Jim Simons:
When everyone is running around like a chicken with its head cut off, that's pretty good for us.”
Reference:
https://www.investopedia.com/terms/g/gap.asp
https://www.investopedia.com/terms/v/volatility.asp
Use the following link to access trading ideas: patreon.com/SniperTraderStocks?utm_medium=unknown&utm_source=join_link&utm_campaign=creatorshare_creator&utm_content=copyLink
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.