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Gap to Gap



In a late post on yesterday's Buzz, I noted the bearish bias (for today) as a result of the most recent two day pattern in the SP futures. The details are listed below:

There were only nine occurrences but I think the results are worth a closer look. First, the pattern seems to suggest a high probability of a pause today and a decent chance for higher prices five and thirty days later.

Since the most recent occurrence was in March 2000, I've highlighted the potential similarity between now and then. Remember that past performance does not indicate future results. Nonetheless, we should be on alert for a similar move. I could argue that a strong payroll number this Friday would produce similar results. Regardless, it's an intriguing comparison to the pattern that preceded the all-time high for the index.

Exploring the theory of a "counter-trend Tuesday", I've listed two additional queries which also suggest a lower close today:

  • What happens when the date is Tuesday and ND futures closed up 5 days in row? There were 20 occurrences and the ND closed lower 70% of time.
  • What happens when the date is Tuesday, the SP futures closed up 5 days in row, and on Monday the SP traded positive prices only? The SP closed lower in 5 of 7 occurrences.

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No positions in stocks mentioned.

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