The market is already short-term oversold and now SPY is gapping down large this morning. I looked at other times there were 4 lower lows followed by a gap down below the previous day’s low. Below are results looking back to 2006.

Not a ton of instances but the stats lean quite heavily to the long side. Between 2003 and 2006 the upside tendency was not apparent. I was unable to look back past 2003 this morning. Below are all instances from 2006 – present.

If you find morning gap analysis like this useful, you may want to check the work of my friend, Scott Andrews over at MasterTheGap.com.  I look at studies like this occassionally, but it is his primary focus.