I looked at the chart for SPY just now, and thought, “Huh…two days in a row that have gapped up. Wonder if that’s significant in any way?” By “gap,” I mean that today’s low was higher than yesterday’s high.
When this happens two days in a row, does it mean we should use quintuple leverage to buy everything we can? Sell at the opening bell and hide under a rock? Something else?
Turns out, this double-gap stuff is as rare as hens’ teeth. Since 2000, it has only happened eight times (including today). Therefore, NO CONCLUSIONS CAN BE MADE! There isn’t enough data to glean anything useful. But in case you were wondering, here’s how it would look if you bought at tomorrow’s open (“O1”), and held to tomorrow’s close (“C1”), the following day’s close (“C2”), or until five days later (“C6”). Again, nothing useful other than to ponder why this might be so rare.
Ticker Date/Time O1 to C1 C1 to C2 C1 to C6 SPY 10/4/2004 0.04 0.68 -1.16 SPY 12/24/2007 0.61 -0.66 -2.55 SPY 9/7/2012 -0.47 -0.19 1.77 SPY 12/9/2013 -0.13 -1.25 -1.29 SPY 2/17/2016 -0.57 -0.62 1.21 SPY 7/11/2016 0.20 0.18 0.77 SPY 9/12/2017 0.18 0.15 0.14 SPY 7/10/2018 ??? ??? ???
