Wednesday’s big gap-up move seemed to run out of gas on Thursday, as the Dow Jones Industrials Index pulled in about ½ of a percent on lighter volume. Within the context of where the Dow is trading currently, 100 points isn’t much on the chart. So far the Dow has been able to hold above the intraday lows of Wednesday’s gap-up price range with volume declining.
The NASDAQ Composite Index also failed to follow through on Wednesday’s big-volume gap-up move to all-time highs. It is interesting to note that a breakaway gap move on Wednesday didn’t lead to anything that I would consider breakaway action. Obviously, it was strong technical action, but as is often typical of the market, a big show of strength one day may not necessarily lead to a strong follow-up the next.
Meanwhile, the index backed down on Thursday and Friday to test the 10-day moving average and fill Wednesday’s gap. Volume was lighter, so the action looks reasonably benign.
There is the idea that the big market gap-up on Wednesday might have been indicative of a so-called “blow-off top.” That is certainly a possibility we should be open to, but the first clue of a so-called blow-off top would be in the action of individual stocks.
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