We're all worried about what's happening with SPY. A few questions keep popping up:
1.) It gapped down, is it going to fill the gap?
2.) Is this just a temporary correction or the start of a downtrend?
3.) Is this the start of a crash?
For the third question, I don't know. I'm still pretty green. But for the first two, I went through the spy dailies and found every similar gap down (there were 67 of them) and looked at what happened after. There's a little subjectivity here, especially in what "bounded" means, but hope it helps you make an informed decision.
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Gap Questions
Does the gap get filled w/in a day?
- No. (82%)
Does the gap get filled w/in a week?
- Maybe. It does 56% of the time, but a 56/44 split is hardly overwhelming.
If it doesn't get filled after the first day, what's the likelihood that things reverse and it gets filled later?
- Essentially random, 45%
Trend Questions
What direction does it go after a week?
- 28% long, 45% short, 27% neutral. I feel like this didn't tell the story though as I noticed (but didn't track) that the trends before and specific levels played a big part. At least 5 of the gap downs occurred during the 2000, 2008, and 2020 crashes. That's a different environment that our happy little bubble. There were a few long trends that happened post-gap at the bottom of big swing lows. But for the gaps after overextended bull runs, it usually dropped a while. Narrowing down felt too subjective.
What direction does it go after a month?
- 37% long, 45% short, 18% neutral. Same subjective warnings here. Same number of yogi bear picnics. More positive long term up trends. My takeaway was that it gaps down for a reason, and people need to panic some short-term. Log term trends depend on more than 1 day's opening, but one day's opening can be determined by long-term sentiment.
Free Bonus Questions!
If it goes up for a week, will it continue going up?
- Yes. ~75% of the time.
If it goes down for a week, will it continue going down?
- Yes. ~70% of the time.
If it's neutral for a week, will it continue to be neutral?
- Idk, only 2 data points. But those stayed flat.
Thanks, good luck. As a new trader, I love learning. Even if the next few weeks/months/years are down, I'm ready to learn from y'all how to trade.
1.) It gapped down, is it going to fill the gap?
2.) Is this just a temporary correction or the start of a downtrend?
3.) Is this the start of a crash?
For the third question, I don't know. I'm still pretty green. But for the first two, I went through the spy dailies and found every similar gap down (there were 67 of them) and looked at what happened after. There's a little subjectivity here, especially in what "bounded" means, but hope it helps you make an informed decision.
Tweet about this
Gap Questions
Does the gap get filled w/in a day?
- No. (82%)
Does the gap get filled w/in a week?
- Maybe. It does 56% of the time, but a 56/44 split is hardly overwhelming.
If it doesn't get filled after the first day, what's the likelihood that things reverse and it gets filled later?
- Essentially random, 45%
Trend Questions
What direction does it go after a week?
- 28% long, 45% short, 27% neutral. I feel like this didn't tell the story though as I noticed (but didn't track) that the trends before and specific levels played a big part. At least 5 of the gap downs occurred during the 2000, 2008, and 2020 crashes. That's a different environment that our happy little bubble. There were a few long trends that happened post-gap at the bottom of big swing lows. But for the gaps after overextended bull runs, it usually dropped a while. Narrowing down felt too subjective.
What direction does it go after a month?
- 37% long, 45% short, 18% neutral. Same subjective warnings here. Same number of yogi bear picnics. More positive long term up trends. My takeaway was that it gaps down for a reason, and people need to panic some short-term. Log term trends depend on more than 1 day's opening, but one day's opening can be determined by long-term sentiment.
Free Bonus Questions!
If it goes up for a week, will it continue going up?
- Yes. ~75% of the time.
If it goes down for a week, will it continue going down?
- Yes. ~70% of the time.
If it's neutral for a week, will it continue to be neutral?
- Idk, only 2 data points. But those stayed flat.
Thanks, good luck. As a new trader, I love learning. Even if the next few weeks/months/years are down, I'm ready to learn from y'all how to trade.
