Islands of Adventure

Due to the their calculation methodology, the Dow and the SPX don't gap at the open. These two indexes open each day a tick or so away from their previous close. However, the DIA and the SPY DO gap, offering a revealing look at the strength of the current rally.

The NASDAQ, Dow and SPY are each printing a bullish chain of ascending islands. These successive gaps have left shorts stranded below and reluctant bulls underperforming key benchmarks. With economic data and earnings reports coming in modest at worst, the indexes look like they have more gains in store. How much, of course, is a very different question.

So far on Wednesday, investors have seemed willing to buy the dips, action that's consistent with the charts below. However, lots of trading still lies ahead.

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