Stocks Close Lower, But Some Traders See A Silver Lining

Stocks closed lower again yesterday, as stocks couldn't hold onto early gains.

But I was actually happy about yesterday's pullback. And I'll bet plenty of other traders were as well.

As I had mentioned earlier in the week, there was a gap left on the S&P chart from 10/30 at 2,685.43. We finally closed that gap today with the S&P getting as low as 2,685.75. Well, I guess technically we still had another -0.32 points to go. And the gap on the Dow at 24,906.68 is still open as well. But they are both less than -0.70% away from officially being closed.

That's good news because technical traders look at those common gaps as areas that need to be filled. And those gaps typically act as magnets, preventing the market from getting too far ahead of itself before it has to backtrack and fill those in. Because of this, plenty of technicians are reluctant to build new positions until those gaps are gotten.

I'll give a pass to the S&P given the fraction of a point that was left. But with the Dow's gap still open, I would not be surprised to see a little more weakness in the near offing. But once those gaps are filled in, I would expect lots of new buying to come in shortly thereafter, if not immediately.

So yesterday's pullback was great news. And if we see a tad more tomorrow, even better. Because to me, that means we should soon be headed back up.

These inside 'secrets' of chartists and technicians can give savvy traders a great edge in the market.

And it's always important to have an edge.

Another edge is looking at insider trading (the legal kind).

Insiders at publicly traded companies are required by law to disclose their purchases. And do so within 48 hours of their trade. Looking out for large trades and cluster trades (multiple insiders at a company are buying – my favorite type of insider trading), can give an investor a profitable heads up. Because following what people in the know are doing (those people who should know the most about the company's prospects), can often translate to great foreshadowing of what's to come.

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Best,

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