Thursday, November 10, 2011

Large Gaps Up After 3% Drops

With the market set to gap up 1%+ this morning I decided to look at other times a 3% drop was followed by a 1% gap up. Below I have listed all 10 instances along with their intraday performance.

Though the numbers don’t suggest a statistically significant edge, the early indications appear to suggest a tendency for further upside by the close. It is interesting that the avg run-up and avg drawdown are both about 2.8%. So traders could consider playing the intraday oscillations rather than taking a directional bet right off the bat.

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