Mind The Gap!

My friend penned this observation about the possible island gap reversal in SPX, reproduced below (click on the image for a bigger view).

Island Gap Reversal in SPX? (click for bigger image)

 

Mind the gap!!…Users of public transport are used to this warning…For traders and investors, gaps on the price charts can tell varying stories.  Now that asset price leadership, NDX, has closed below the key 1435 level and the economically sensitive barometers of oil, copper and agriculture (DBA ETF) and EEM are breaking down, the gap down in NDX this morning (see attached, circled) taken with a gap higher to start June  indicate a deeper correction ahead for markets, as the “air pocket” down to SPX 878 is materializing.  Watching Asia tonight (NKY, KOSPI, TWSE) will help in determining if prices collapse pre-Fed on Wednesday or drift lower prior to June quarter end.  An indifferent Asia could spark a minor recovery as FXI closes in NY at a 2.8% discount to NAV.