Eleven of 15 instances have closed down the next day. Of course that is a bit of a small sample size, and another concern is the fact that it has been over 4 years since the last instance. Still, I think the study is worth some consideration.
Tuesday, October 15, 2013
SPY Results After Days Like Monday With Strong Gap Reversals To 10-Day Highs
Many traders view reversals like Monday as a positive. The fact that the market overcame a gap down and was able to close in the black and near its highs is interpreted as a sign of strength. I’ve looked at days similar to this in the past and found that most often they are actually followed by short-term market weakness. Below is a study that looks at situations like Monday’s. It assumes a 1-day hold.
Eleven of 15 instances have closed down the next day. Of course that is a bit of a small sample size, and another concern is the fact that it has been over 4 years since the last instance. Still, I think the study is worth some consideration.
Eleven of 15 instances have closed down the next day. Of course that is a bit of a small sample size, and another concern is the fact that it has been over 4 years since the last instance. Still, I think the study is worth some consideration.
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