For example, Is the fade fully to last Thursday’s high? Is the fade partial to about halfway? Is the fade barely perceptible with almost no countertrend activity? Each of these outcomes tells us a lot about each index’s strength and how we should interact with it.

Assume strength above the overnight high at 4038 on the S&P 500 index as there is no technical resistance. Monitor for continuation.

As per Gap Rule #4, don’t discount the potential for the futures market to trade sideways for the duration of the session. This is common on large gaps, and traders should look to individual equities for higher odds intraday plays rather than futures.

As you know, I rarely trade Mondays, and that goes double for Mondays after a three-day weekend. Over the past 34 years, I have learned that traders and even institutions sometimes do weird things after a few days to breathe and reconsider their positions. I like to have that out of the way and prefer to trade beginning on Tuesdays.

The expected move this week for the NASDAQ 100 is 303 points – ranging from 13031 to 13638. For the S&P 500, it is 47 points – ranging from 3972 to 4067. As with most weeks and depending on direction, we will tag one of those levels, and then the market will stall for the rest of the week.

A.F. Thornton