{"id":43372,"date":"2023-11-07T04:46:19","date_gmt":"2023-11-07T04:46:19","guid":{"rendered":"https:\/\/prosfunds.com\/markets\/why-the-sp-500-etfs-rare-triple-gap-ups-isnt-a-buy-signal\/"},"modified":"2023-11-07T04:46:21","modified_gmt":"2023-11-07T04:46:21","slug":"why-the-sp-500-etfs-rare-triple-gap-ups-isnt-a-buy-signal","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=43372","title":{"rendered":"Why the S&P 500 ETF\u2019s rare triple \u2018gap ups\u2019 isn\u2019t a buy signal"},"content":{"rendered":"
\n

The SPDR S&P 500 ETF\u2019s big rally last week was very rare, as it accomplished something that has happened only three other times since its inception 30 years ago.<\/p>\n

But rare doesn\u2019t make it bullish, as history suggests there\u2019s a good chance the SPDR ETF
\n SPY,<\/span>
\n which is also known as Spider, will suffer through some weakness over the next few weeks.<\/p>\n

\n

Jonathan Krinsky, technical analyst at BTIG, pointed out that the SPY ended last week with three-straight \u201ctrue-gaps\u201d higher. A \u201ctrue gap\u201d up is when a daily charted instrument\u2019s intraday low is above the previous session\u2019s intraday high, leaving an empty space in the chart.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

The SPY low on Friday of $433.01 was 0.5% above Thursday\u2019s intraday high of $430.92, Thursday\u2019s low ($426.56) was 0.7% above Wednesday\u2019s high ($423.50), and Wednesday\u2019s low ($418.65) was above Tuesday\u2019s high of $418.53.<\/p>\n

Since SPY started trading in January 1993, it has only had three straight gap-ups three other times: the three-session stretches that ended March 13, 2019, Oct. 12, 2020, and March 31, 2023, according to BTIG\u2019s Krinsky.<\/p>\n

Of those three, only the 2020 triple gap-up was the most like last week\u2019s, as the final two gaps had at least 0.3% of space in the charts.<\/p>\n

What followed after that gap-up streak was a three-week selloff, in which the SPY fell as much as 7.3% to a five-week low of $326.54 on Oct. 30, 2020, before resuming their rally.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

On Friday, the SPY rose as much as 0.3% after the open, before reversing course to be down 0.1% in afternoon trading.<\/p>\n

After the 2019 triple gap-ups, the SPY traded sideways for the next few weeks, with a low point of $279.04 on March 25, or 0.8% below where the gap-ups closed.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

And following the 2023 triple gap-ups, the SPY bounced around in a relatively narrow range for about six weeks. The closing low of that range was $404.36 on April 26, or 1.2% below where the gap-up streak ended.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

Krinsky noted that a sample size of just four triple gap-ups in 30 years is \u201cstatistically irrelevant,\u201d but said it shows \u201chow rare last week\u2019s action was.\u201d<\/p>\n

Many chart watchers believe that eventually, price gaps in charts will be \u201cfilled,\u201d meaning the charted instruments will at some point trade at prices separated by the gaps sometime in the future.<\/p>\n

While Krinsky said his research indicates that not all gaps get filled, he believes that all three of last week\u2019s gaps below will be filled, before the ones above current prices do.<\/p>\n

The first price gap above current prices is the one between the Sept. 20, 2023 low of $438.43 and the Sept. 21 high of $435.97. Above that, there\u2019s a gap between the Sept. 14 low of $447.71 and the Sept. 15 high of $447.48.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

That means Krinsky believes the SPY will trade at least 3.7% below Friday\u2019s closing price of $434.69, before it rallies 2.9%.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The SPDR S&P 500 ETF\u2019s big rally last week was very rare, as it accomplished something that has happened only three other times since its inception 30 years ago. But rare doesn\u2019t make it bullish, as history suggests there\u2019s a good chance the SPDR ETF SPY, which is also known as Spider, will suffer through […]<\/p>\n","protected":false},"author":1,"featured_media":43373,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[33],"tags":[],"class_list":{"0":"post-43372","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets"},"yoast_head":"\nWhy the S&P 500 ETF\u2019s rare triple \u2018gap ups\u2019 isn\u2019t a buy signal | Prosfunds<\/title>\n<meta name=\"description\" content=\"The SPDR S&P 500 ETF\u2019s big rally last week was very rare, as it accomplished something that has happened only three other times since its inception 30\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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