What is a Gap?

  • A gap up occurs when the market or an individual issue opens higher than the high on the previous day.
  • A gap down occurs when the market or an individual issue opens lower than the low on the previous day.

Sunday, January 26, I commented US Futures Poised to Gap Down on Coronavirus Scare: What Then?

Here is the chart I posted.

Image placeholder title

Sunday Evening Mish Recap

In this case, S&P 500 futures are at 3257 with the low on Friday at 3281.53.

The close on Friday was 3295.47, but that is irrelevant. This gap down, assuming there is one, will close at any time in the future when the S&P 500 trades at or above 3281.53.

Gaps Act Like Magnets

I am a firm believer that Gaps fill sooner or later but typically sooner.

However, gaps can take days, weeks, months or even years to fill.


All the while, they act like magnets.

Best Bear Case

The best bear case is if this gap down fills quickly then the market collapses as soon as it does.

Mind the Gap

Until a convincing new stock market high is in place and back tested we are at a potential market top.

Yes, one could make similar comments at any time.

But from a trading observation, one has a relatively low-risk stop out point when placing a trade.

Gap Magnets

Image placeholder title

I now expect those gaps to close sooner rather than later.

Those wishing to play the long side can think about a buy order in that lower gap with a convenient stop close by.

Mike "Mish" Shedlock

US Futures Poised to Gap Down on Coronavirus Scare: What Then?

US futures are poised to gap down at the Monday opening. Things can easily change overnight but this is likely to stick.

Global Pension Gap Expected to Hit $400 Trillion: US Leads the Way

The global pension gap of 8 nations is $70 trillion. The US alone is $38 trillion. By 2050 the total gap will hit $400T.

Trump and China to Sign Trade War Ceasefire on Wednesday

On Wednesday, the US and China will sign a compromise deal that will calm but not end a two-year trade war.

Spotlight J.C. Penney: Will It Close 20 Stores or 200? Bankruptcy Anyone?

Analysts debate how many stores J.C Penny will close this year. The numbers vary widely.

Trade Gap Surges, Mexico Overtakes Japan for 2017: Placing the Blame

The trade gap widened much more than expected in December. Imports and exports rose, with imports rising far more.

Coincident Economic Indicators: History Suggests Recession is Close

The Philadelphia Fed's coincident economic activity index suggests the economy is close to recession.

How Twisted Minds Function

The economic theories arising out of Australia are both amusing and frightening. In the latest bit of madness, an economist pleads for more inflation, blaming cheap overseas retailers for Australia’s housing bubble.

Brexit Fictional Politics: What's Really on Macron's Mind?

There are only two places I have seen that are willing to say France may offer a short or conditional extension.

Allegedly, There is a Gender Gap in Economics

The economics profession supposedly has a diversity problem. I have a few questions.