http://www.pikertrader.com/2009/10/gaps-and-divergence-and-spx.html
Gaps always get filled is an old saying, but there is no time frame to when gaps get filled. Right now on SPX there are three filled gaps below the current market price. There is also a gap at 900 that has not been filled yet.
Right now the market is looking neutral, sitting between support and resistance. If the market starts selling, the market could gravitate towards these gaps. But the trend is still up and the market will trend towards resistance.
Here is the daily chart of SPX, you can see the first two gaps on the daily chart. The 900 gap is not highlighted.
What is interesting to note is the divergences on the indicators. While price has made a new high, MACD has not. Also shown is the CMF indicator, look how there is less accumulation during the latest rally.
There is a lot of chatter about going to 1100, but because this is the most predictable area for the market to move too this might not happen. In fact the sentiment is very bullish going into next week.
Look at the 5 day EMA on CPC, it is at a very low level indicating some strong bullish sentiment as well.
It is still hard to get bearish on the market when you have the energy sector breaking out. Remember oil and energy has been leading the market. If oil and energy can sustain this move, equities can keep climbing.
