It’s hard to imagine a stronger way to start off the second quarter as US equities and risk assets around the world are surging following what is being billed as a cease-fire in the US-China trade war and President Trump’s meeting with North Korean leader Kim Jung-Un over the weekend.
While the news surrounding trade has been positive, the reality on the ground remains less optimistic. Manufacturing PMIs for the month of June continued to show weakness around the world, and this morning’s ISM Manufacturing report for the US will kick off a busy week of economic data in the US that will go a long way in determining whether the market is correct in its pricing of 100% certainty that the FOMC will cut rates at the end of the month.
Read today’s Morning Lineup to get caught up on everything you need to know ahead of the new trading day including a recap of overnight trading in Asia and Europe as well as a rundown of all economic data released.
The S&P 500 SPY ETF is set to gap up more than 1% this Monday morning, so we wanted to highlight a few stats surrounding similar types of moves.
Since 1993 when SPY began trading, there have been 255 gaps up of 1%+, which accounts for 3.8% of all trading days. On these 255 days, SPY has averaged a further gain of 0.20% from the open to the close of trading after the initial jump at the open.
Today is also a Monday morning, and there have been 49 Monday mornings since 1993 in which SPY began the trading week with a 1%+ jump at the open. On these 49 Mondays, SPY has averaged a further gain of 0.18% from the open to the close of trading. Notably, though, returns one week from the open following Monday gaps up of 1% have been poor, with SPY down an average of 1.12% five days later.
It’s also the first trading day of the month. Since 1993, SPY has gapped up 1%+ on the first trading day of the month 16 prior times, which is about 5% of the time. The average open to close change on these days has been positive at +0.34%.
And what about Monday gaps up of 1%+ to start a new month? That has happened 9 times since 1993, which is 7.4% of the time. On these 9 trading days, SPY has basically been flat from the open to the close of trading.
Finally, there have been just 4 starts to a new quarter that have seen 1%+ gaps higher at the open for SPY, and on these 4 days, SPY has continued higher from open to close twice (50%). Five days later, though, SPY has been higher every time.
Today would be the first time in its history that SPY has gapped up 1%+ at the open on the first trading day of July.
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