It looks like news headlines have finally gotten to the market.  Following leaks of the Comey Memo, US equity futures immediately traded lower, and while they stabilized overnight, sellers rushed in ahead of the open.  As a result of the weakness, the S&P 500 tracking ETF SPY gapped down 0.829% at the open, making this the worst downside gap for the market since the election.  As shown in the table, since Election Day last November, SPY has only gapped down more than 0.30% thirteen times and only two of those prior occurrences were more than half of one percent.  Looking at the prior downside gaps, SPY traded higher from the open to close two-thirds of the time for an average gain of 0.26% (median: 0.12%).  Will the buyers step in again this time to bail out the bulls?  We wouldn’t bet against it.  If we don’t bounce, however, it could be a sign that a more sustained pullback is at hand.

SPY Gaps

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