Market’s Not Over Until….

She’s dancing, not singing! Not yet anyway. The market, after making new all-time highs in all four indices- three of which had runaway gaps, saw some light selling at the week’s and month’s end.

The S&P 500, for example, after topping out midweek at 291.74, corrected for the last 2 days of the week. Until the last-minute push to green, that is. The Dow also made new highs last week. By Friday though, it closed slightly beneath 26,000, yet ultimately held the runaway gap. As long as DIA holds above 257.80, that gap remains intact.

NASDAQ, the third of the indices to have a runaway gap, barely budged in price from its high point at 187.52. QQQ closed the week with an inside day, right near those all-time highs. That sets it up for Tuesday. Either QQQ clears those highs and keeps going, or it fails 185.79 and sees its way closer to support about $3.00 lower.

Regardless, the runaway gap, shallower than the one SPY had, will maintain itself if QQQs do not trade below 182.95.

With all this good news for the bulls, what would make our portly lady sing?

5 major factors to watch out for.

The runaway gaps get filled. Should that happen, it’s not necessarily bearish, but it definitely takes the wind out of the rally’s sails.

The market gaps lower and does not run up from there. Specifically, should SPY gap below 288.68, the low from 8/27 and the runaway gap day, and not fill that gap, we go from looking at a runaway to a potential island top. Not good should that occur and confirm.

Transportation (IYT), I never forget about that sector. Working off a possible reversal topping pattern and/or worse, a double top, this should be monitored carefully. If IYT can clear back over 205.25, the low of the day it made new ATHs, no worries. However, it will still have to make another new all-time high to negate that reversal pattern. What keeps me up at night? That IYT makes at double top. That pattern I fear, would be the thing that makes our lady sing.

The Russell 2000 (IWM) made a new ATH last Friday. It had been consolidating. IWM is the holdout on having a runaway gap. A move under 171 would be troublesome. A gap over Friday’s high inarguable.

Note that I have not included any fundamental factors like tariffs, emerging market slowdowns, Iran and North Korean threats of aggressiveness. Why not? What I have spelled out is how any of those will or will not impact price. Price rules.