Mind the gap - that opening upside gap

Too much optimism at the open? Watch the opening upside gap on the SPDR S&P 500 ETF.

Here's some context:

• Yesterday was an 80% up day for the NYSE - solid breadth.

• That said, the S&P 500 reached a new high, but the advance-decline line (A-D) line and volume A-D line are lagging and did not reach new highs - so breadth and breadth of volume have not (yet) confirmed the rally. Either these indicators catch-up with price or the divergence persists.

• Watch today's opening upside gaps across the QQQ, SPY (see chart below), and IWM.

• Folks must have read the paper about yesterday's CPI report and possible Fed cuts, and they gapped the US equity market higher this morning.

• Gotta love August, which often serves as a transition month from summer strength to autumn weakness.

• Too much optimism on today's open? Time will tell.