Reversals like this always look ugly, but I thought I’d take a little closer look.
Using the SPY I checked all other times there was a gap up of over 1% and then a close at a 200-day low. Today was the first. So I loosened some parameters.
A choppy beginning but once you get out a few weeks things look very good. An average trade of over 5% in the next 4 weeks is impressive. Of course the number of instances is extremely small. So I lowered the gap requirement to 0.5%:
Nothing mind-blowing but over the next 1-2 weeks it showed a decent upside edge. Of course there has been a multitude of reasons the market should bounce for a while now.