An Interesting Pattern Of Strength

After gapping down Tuesday morning the market put in a sizable rally. The S&P gained over 4% from open to close. I looked back at other times the SPY gapped lower and then gained over 3.5% from open to close.

The low number of instances means this is more “interesting” than “significant”. The pattern was fairly consistent as 5 of the 6 closed below the entry point within the next week before launching higher. The six instances occurred on 10/28/97, 10/15/98, 1/3/01, 7/24/02, 3/17/03, and 1/23/08. Some significant bottoms in that mix. The only instance that didn’t pull back within the next week was 10/15/98.