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The S&P 500 Index ($SPX) is near its all-time highs, but that doesn’t mean traders should be blindly buying at these levels. Instead, John Rowland, CMT, suggests keeping an eye out for a potential pullback to support — and in last Friday’s Market on Close livestream, he explained why a recent S&P gap zone is the area he’s watching for a short-term correction.
Gaps form when an index or stock “jumps” from one price level to another at the opening bell, leaving a blank space on the chart in between the prior day’s close. These blank spots often act as magnets for price action, with markets returning to “fill the gap” before resuming a trend. For traders, gaps represent both risk and opportunity.
In the current setup, the S&P 500 is still trading within its upward channel, but John points out that if the index breaks the channel and slips below 6,200 — a key psychological and technical level — traders should be prepared for a deeper correction.
John highlights one gap in particular that the S&P could be looking to fill, and it’s the same gap that kicked off this most recent rally. That zone sits between 6,028 and 6,059 on the S&P 500.
If the S&P 500 revisits that level, it would represent about an 8–8.5% pullback from current prices.
This would classify as a relatively minor correction, but it’s still the kind of dip that could offer investors a much better entry point than chasing all-time highs.
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Don’t chase all-time highs: If you’ve built positions earlier, this is a time to ride the trend, not add exposure.
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Watch 6,200: A break below here suggests a deeper move down toward the gap zone is possible.
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Key demand zone: Between 6,028–6,059, where gap support aligns with previous all-time highs.
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Correction potential: Roughly 8–8.5%, which is healthy in the context of the broader uptrend.
Ultimately, John Rowland concludes: “I love gaps, and I wouldn’t be surprised if this market pulls back into that zone. That’s where I’d want to be a buyer.”
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