|The Nasdaq index has a colorful history of gaps and even those "doji rally killers" that I have pointed out several times in the past. These gapping plays often get ahead of themselves but do show very bullish momentum. The chart depicting the 2001 pattern illustrated a very bullish pattern of four upward gaps. These led to a couple of normal retracements before a doji "rally killer" finally appeared warning of a likely downtrend. The impressive feature was an advance of about 700 points since that bottom before the top was hit, including a 300 point advance above the series of four gaps. Of course the longer term outcome did result in each of those gaps eventually being filled to the downside.|
|Presently the Nasdaq shows a series of three bullish gaps and IF history repeats...this implies enough bullish momentum to carry it further still, at least in the shorter term.|
|Graphic provided by: stockcharts.com.|
|Events to watch for going forward are another advance on increasing volume and a normal retracement or two before hitting a top marked by an ominous candlestick warning. This is a bullish view based on the pattern of upside gaps showing some impressive bullish momentum. Traders should remain alert to whatever evolves going forward.|
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