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Gaps Opening Below the S-1 Pivot

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Thursday, July 2, 2009 at 5:18PM

Gap Guy

Thursday's nasty down gap in the US indices leading into the long holiday weekend was an easy one to pass on for me. Why? Because there were so many historical negatives stacked against it. Here's some research (from my Los Angeles Traders Expo presentation) that shows one of the big risk factors for today's gaps. It shows the historical probability of a winning "fade" (i.e. going long) at the open of the E-mini S&P futures and the QQQQs ETF when they open BELOW their respective S-1 pivots.

Other patterns that fired today include opening below the 600 MA on a 5 min chart (see prior research in this blog on that topic), and opening down after a shooting star candle pattern as discussed in this previous video at www.masterthegap.com.

Note: The results below assume that you faded the opening gap and closed it out at gap fill (prior day close) or exited at end of the day.

So the next time your favorite stock or index opens below S-1, you might want to watch out below.

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Reader Comments (2)

Is this referring to globex or RTH pivot numbers?

Aug 16, 2009 at 6:47PM |

jackj

I use Regular Trading Hours for all of my analysis. Thanks for the question.

Aug 16, 2009 at 9:07PM |

Gap Guy

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