Gapping Up

So we have another gap up this morning. Typically one of two things happen in this type of market open, either we get acceleration in the direction of the gap, in this case, continued buying, or the gap will get rejected and price action will move back to the close of the previous day of trading. We have seen small gaps in three of the previous four trading days and on all three occasions, the gap was filled, meaning price reverted to settlement. Interesting to keep in mind that we still have an unfilled gap back on 7/22 at $1064-1067 on ES.

I am leaning toward acceleration today. I will be looking for the ES to trade up to 1117 at which point I will look for opportunities to sell the market. Market feels strong and I won't be surprised if we break out to some new highs past 1119, so I won't be set on getting any big moves to the downside. For the moment, I am biased to the long side, so we'll see how trading progresses. Significant resistance points are 1117-1119 and 1127-1129. Support at 1110-112 and 1102-1104. If we do move down to fill the gap, we could chop around anywhere between 1095 and 1102 before potentially moving back up.

This morning earnings have been strong. This is another big earnings week. Be aware that ISM Manufacturing Index to be released at 10:00 EST. Something to be conscious of as the markets could react to any surprises there.