Stock Market rebounds again after large Gap Down

The SPY (tracks the S&P 500) opened down 2.345% today. Counting today, since 1994, the SPY has gapped down more than 2.25% 17 times. It has closed higher than it opened 16 times with an average gain of 2.89%. Today SPY continued the trend closing 1.37% higher.

I discussed this trend in this earlier post. Here is the updated spreadsheet.



Here is a look back at the days with largest gap downs with intraday charts going back to 1998.

9/17/1998: The stock market was affected by the Russian/Emerging Market Crisis. Russia defaulted on their government bonds in August and September. Long Term Capital Management (LTCM) was unraveling due to related highly leveraged trades. LTCM was bailed out by the Fed on 9/24/1998.



9/21/1998: Russian/Ererging Market/LTCM Crisis.



10/8/1998: LTCM used up $1.9 billion of $3.6 billion injected into the fund the prior week with the Fed bailout. Another hedge fund, Tiger Management, lost $2 billion on October 7 because of the Yen Currency bets.



1/13/1999: Brazil scraps their currency support and lets their currency float resulting in currency devaluation.



03/13/2000: The Nikkei closed down 560 points (2.8%) as Japanese Q4 GDP was down 1.4 from the previous quarter. S&P Futures were down 27 points before open and Nasdaq futures were at a lock-limit down of 82.



04/27/2000: Nikkei closed down 115 points (0.6%); Korean Kospi fell 21 points (3%). U.S. Q1 Employment Cost Index rose 1.4% leading to fears that the Fed would get more aggressive in trying to cool down the economy. S&P futures were 34 points lower and the Nasdaq futures were at a lock limit down of 110 points before open.



03/14/2001: DAX was down 2.5%, FTSE was down 1.65% over concerns about a slowdown spreading due to hawkish ECB. Fitch downgraded 19 Japanese Banks. S&P and Nasdq futures were both trading lock-limit down before open.



09/17/2001: U.S. stock markets reopen after being closed since the 9/11 attack. The Nikkei closed down 5%. U.S. Equity futures were not trading prior to open.



9/21/2001: Nikkei closed down 2.35%; Hang Seng down 4.1%; Dax was down 6.38%, FTSE down 5.46%. S&P Futures were down 38 points and Nasdaq futures were down 48 points before open.



6/26/2002: Nikkei closed down 4.0%; Hang Seng down 2.4%; Dax was down 4.7%, FTSE down 3.1%. S&P futures were down 27 points and Nasdaq futures were down 44 points over WCOM accounting fraud concerns.



07/24/2002: Nikkei closed down 2.6%; Hang Seng down 3.3%; Dax was down 4.2%, FTSE down 3.0%. S&P futures were down 19.2 points and Nasdaq futures were down 18.5 points on weakness overseas and a follow-through of the previous day’s declines of 4.5% for the Nasdaq and 2.7% for the S&P.



1/22/2008: Nikkei closed down 5.7%; Hang Seng down 8.7%; Dax was down 0.9%, FTSE was up 0.2%. S&P futures were down 60.8 points and Nasdaq futures were down 83.8 points. There was a global equity selloff while the U.S. market was closed for MLK day. Fed cuts rates by .75% ahead of its scheduled meeting on 1/30/08.



1/23/2008: Nikkei closed up 2.0%; Hang Seng was up 10.7%; Dax was down 2.0%, FTSE was down 1.0%. S&P futures were down 39.6 points and Nasdaq futures were down 69.4 as ECB says that keeping inflation in check is top priority. Apple issues a disappointing outlook.



3/17/2008: Nikkei closed down 3.7%; Hang Seng down 5.2%; Dax was down3.5%, FTSE was down 2.3%. S&P futures were down 28.4 points and Nasdaq futures were down 46.2 points on news that Bear Stearns was being acquired for $2 a share by JP Morgan Chase. The Fed cuts the discount rate by .25% over the weekend.

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