With corona virus news scaring the market pre-open today, I decided to look back at other time SPY has gapped down more than 2% when it had been in a long-term uptrend. As you might suspect, instances have been fairly rare. Looking ack to SPY inception, there were only 16 other instances. And upping the filter to 2.5%, the instances drop to just 5. (As I type, SPY is indicating 2.4% below Friday’s close with about 1 hour until the open.)
Every scare is different. But most of the time in the past we have seen a decent bounce at some point in the next few days. Today, and the next few days should be interesting. (But the market is often interesting to me, and 2020 does not appear like it is going to be dull.)
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