17 Gaps And What Do You Get?

Posted 11/15/11 by Jason Goepfert                                                                                       Archive »

Last week, the S&P 500 futures gapped open by more than +1% and didn't fill that gap during the day.  This means that the S&P didn't reverse enough to kiss the previous day's close.

That might feel familiar.  It was the 17th time in the past 3 months that we'd seen a +/- 1% gap open that didn't fill during the day.

This is a rare historical feat.  Since 1982, it has happened only five other times.  The most recent ones are shown below.

As is pretty obvious from the chart, all of them occurred while the market was forming a major bottom.

From 1982 - 1998, the only other time that even remotely equaled this was January 1988, with 18 such unfilled gaps during a 3-month span.  Again, that proved to be a major market bottom.

So other than our current situation, there were five times that the S&P saw a large number of unfilled gaps in a 3-month span.

All five marked major market bottoms.

Hmm...