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Fill the gap or double top? – TVO MB 2-28

Thursday’s volume action on the Heat Gauge had a familiar feel… A large rush of down volume early in the session suddenly cooled down by midday. This time, though, things heated back up at the close.

Still, it’s really feeling like the market is just giving us more of the same over and over again.

Basically what’s happening over the last week or so is, along with the price of SPY, HG has remained in a tight range. A tight range of anything is almost always a sign of consolidation.

I mentioned before that more overall volume would help the bull’s case for a bounce here, and at 14% it looks like Thursday’s session is just what the doctor ordered. The SPY 276 gap fill may have to wait.

If SPY does indeed rise back from here, it’s likely the bears will prepare to sink their teeth into what could be a 281 double top. While that may whet their appetite for the time being, the longer we remain in this tight range, the more likely the bulls will be the last ones to leave the table. -MD

Sentiment: HUNGRY – Markets are accumulating at an accelerated rate and big institutional buying is heavy and aggressive.

Volume: 14% – Today’s volume was higher than the previous session.

Real Feel: BALMY – Bears were in control of the session with considerable buying under the surface.

Cycle: BULLISH II – Retail investors are overly cocky and heavily positioned in their holdings.

Portfolio: HEDGE – The market is over saturated and long-term investments warrant some protection.

Next Day Move: SIDEWAYS - The probability that SPY will close positive in the next session is 54%.

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