What QualifiesFirst, let's review. To qualify as a potential nascent momentum mover, a market must have made at least five gaps, expansion bars or laps in the direction of the momentum during the past calendar month. A gap occurs as a hole in a chart where none of the price action overlaps from one day to the next. An expansion bar here is defined as the largest range day in a week. Similar to a gap, a lap up is a pop higher where the previous day's close and the next day's open or close don't intersect but the highs and the lows of the two sessions do intersect. (The opposite is true for a lap down.) Let's look at three markets demonstrating the critical mass of at least five gaps, laps or expansion bars over the past month and then see how they relate. June 10-year notes (TYM3:CBOT) nudged to a record high close last Friday.
July corn (CN3:CBOT) has accelerated off the test of a contract low. And like the situation pointed out in wheat last week, corn has overbalanced to the upside, paving the way for a reversal of the seven-month downtrend.