Gap & Go

S&P futures posted a higher high, low and close on the heels of Thursday’s unfilled upside gap. This ‘gap and go’ pattern is typically a bullish indication looking out two trading days, as a rally day after an upside gap suggests bullish momentum remains intact. The last thirty times that the front-month S&P contract posted a higher high, low and close immediately after an unfilled upside gap are listed in the table below…

S&P Futures Post Higher High, Low & Close After Upside Gap
11/05/10… S&P futures ??? two sessions later
09/02/10… S&P futures +0.2% two sessions later
04/15/10… S&P futures -1.1% two sessions later
03/08/10… S&P futures +0.8% two sessions later
03/02/10… S&P futures +0.4% two sessions later
12/28/09… S&P futures -0.1% two sessions later
12/22/09… S&P futures +0.8% two sessions later
12/11/09… S&P futures +0.1% two sessions later
11/10/09… S&P futures -0.4% two sessions later
10/15/09… S&P futures +0.1% two sessions later
10/09/09… S&P futures +0.1% two sessions later
09/09/09… S&P futures +0.9% two sessions later
07/16/09… S&P futures +1.4% two sessions later
06/02/09… S&P futures -0.2% two sessions later
05/05/09… S&P futures +0.4% two  sessions later
04/13/09… S&P futures -0.6% two sessions later
11/25/08… S&P futures +4.9% two sessions later
04/17/08… S&P futures +1.2% two sessions later
04/02/08… S&P futures +0.1% two sessions later
12/24/07… S&P futures -1.1% two sessions later
12/06/07… S&P futures +0.8% two sessions later
11/29/07… S&P futures +0.3% two sessions later
07/13/07… S&P futures -0.1% two sessions later
04/17/07… S&P futures +0.1% two sessions later
02/15/07… S&P futures +0.2% two sessions later
11/30/06… S&P futures +0.6% two sessions later
08/17/06… S&P futures +0.1% two sessions later
11/18/05… S&P futures +1.0% two sessions later
05/27/05… S&P futures +0.1% two sessions later
05/19/05… S&P futures +0.4% two sessions later
02/01/05… S&P futures +0.0% two sessions later

Note that in 23 out of the last 30 occurrences, or 77% of the time, the S&Ps were trading higher two sessions later, well above the 54% random odds of a higher S&P two days later. Gains were not especially large, but the market generally remained on firm footing. This suggests that a down day Monday will be followed by another upside push Tuesday.

Also keep an eye on Friday’s high at SPX 1227.08. Trade above that level on Monday would trigger the ‘second higher high after a 90% up volume day’ buy signal that would call for a close above 1227 either Monday or Tuesday. See my September 22nd column for a recent track record.

Categories : Archived EOD Commentary, End-of-Day Commentary

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