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Gap to Gap



As Toddo said yesterday, we've got more gaps than a shopping mall. The spooz are set to open substantially higher this morning. Since we gapped down to a new yearly low on May 10, the bulk of the day's moves have occurred overnight. The table below shows that despite some large gaps over the last 7 days, there hasn't been much movement from the day's open to the day's close (the table is in points not percent).

Mostly, this reminds us that large up or down opens are filled with emotion and very often there is little follow-through. But what about today? It's interesting that today's higher open occurs after a gap that never traded negative yesterday and then a gap that never traded positive two days ago. Since Minyans are inquiring minds, I ran a query combining those conditions with today's higher open. The results are listed below.

The bias is decidedly bullish for the day's close with 87.50% of the occurrences closing higher on the day. But I was most interested in the day's close relative to the day's open. In fact, 9 of the 16 closed below the day's open. Hmmm, you mean there wasn't much follow-through? Sure sounds like the last seven days! Nonetheless, the closing bias is bullish. Every Minyan must define their own timeframe as a function of risk / reward. For me, I look at these statistics and formulate a plan. For today, I'll look to buy pullbacks, not chase an up open, and if we trade lower on the day, then Hoofy's gameplan has gone awry. Good Luck! Remember past performance does not indicate future results.

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