HedgeFundLIVE.com — Tuesday, April 12 the SPYs gapped down 56bps. I ran a basic study on how the market tends to react following a gap down day. On days when the SPYs gapped down more than 50bps, the median next day return wass +11bps while the average wass +16bps. The positive percentage changes suggests to me that we will get a small breather day on Wednesday as opposed to seeing the downward momentum carry over into the following day.
Meanwhile, the median next 5D change is +32bps so I remain short term bullish. Despite the appearance of rolling over on the daily charts. We do also have some decent support on the 23.6% Fib Retracement level on the SPYs at 130.40. On the S&P futures, that retracement level is at 1300, also a good psychological level as well. So overall, I’d say it’s okay to remain bullish on the market at this point. I’m a believer in healthy pullbacks in a strong upward trending market.