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Analyze What Happens After AAPL Gaps Over 2% (Interactive) 

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AAPL Chart

As you can see in the chart below AAPL is forming an inverse head & shoulders pattern. To complete this bottoming formation it needs to break above the 50 day moving average. 

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AAPL Gaps Over 2%

In the two graphs below one can see how AAPL moves after a 2% or more over night gap.

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How Does SPX Performs After a Volatile Start of the Month

This week SPX has been all over the place. I wanted to see how SPX performs after its falls over 2.5% the first day of the month and rallies the next day. Since 2000, such event has occurred 6 times. The table below shows the results. 

Although there are not too many cases the trend is pretty clear that the market tends to continue its move higher when this happens.

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AAPL’s  2 Day Volatility

I wanted to check how AAPL performs when it drops 4% or more in a day and then it rallies over 3% the next day. Such event has occurred 50 times since 2000. The table below shows how AAPL performs days into the future.

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Since 2000, SPX has fallen 2.5% or more in the first day of the month 9 times. The table above shows how SPX performed 1, 5, 10, and 20 days into the future.

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AAPL at critical technical levels. Holding this level the next couple of days will be very important for AAPL stock.

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Big Down Months in SPX

After the recent slide in August, I wanted to check how SPX reacts months after a pullback of 5% or greater.

Since 2000, SPX has fallen 5% or more in a calendar month 24 times. As you can see from the table below there is no real trend of what happens several months into the future.

If we compare these results against what we got in the previous post we can see the big difference in next month’s returns. 

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August SPX Analysis

After closing August, I wanted to check if the recent move and volatility were normal for the month of August or just an anomaly.

Since 2000, the average move for August is pretty much flat 0.24% (see table below).

I am more interested in quantifying how September plays out when there is either a big monthly range (10% or more) or a big downside move (over 5% pullback).

Since 2000, a big monthly range has occurred 3 times. The table below shows the results of what happened to SPX, months into the future once the event takes place.

Since 2000, a big downside move has occurred 3 times as well. As you can see in the table below, the results 1 month into the future (September) are very similar and suggest a further downside to come.

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AAPL is at key level right now. If we are able to hold onto the daily gains or break higher, then the next target will be 121. We could hit this target as soon as next week given the volatility. This week, AAPL is up over $20 from its low. Also, there are a couple of catalyst on the horizon that should help the stock. Rumors are that the Apple Watch doing a lot better than previously anticipated,  and the announcement of the new iPhone 6s launch.

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SPY Down 10% or More in 5 Trading Days

Since the start of the market selloff volatility has picked up very fast. We’ve had big over night gaps and huge daily ranges. I wanted to see what happens when SPY is down over 10% or more in just 5 trading sessions. Since 2008 there have only been 11 cases that met the criteria ( including Aug. 25 2015).

The table below shows the results of what happen days after the event. 

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DOW Jones Moving over 3.7% to the Upside

Since 2008 DJI has closed up by 3.7% or more only 16 times. Last time DJI closed up by more than 3.7% was back in 11/30/2011. 

As you can see in the chart below DJI had a nice rally after.

The table below shows how DJI performs after such event occurs.

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What Happens When SPY Gaps Over 2% Intraday

As you’ve seen lately, volatility has picked up a lot. We have had big overnight and intraday moves in the market.

Here is what happens intraday when SPY gaps more than 2% to the upside:

Total number of big gaps  27 * Total number of big gaps filled  10 Percentage of big gaps filled  37.04% Total number of big gap trends  23 ** Percentage of big gap trends  85.19% Percentage of gap trends when the gap is filled  13.79

*I am cosidering 2% to be a big gap for this article **A big gap trend is defined here as a gap of 2% or more and closing higher on the day.

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What Happens When SPY Gaps 3% or More.

Since 2008 SPY has opened with a gap of 3% or more only 7 times. It was able to fill the gap only once (Oct. 14 2008) and that same day it closed lower.

The table below shows how SPY performed leading to the event.

In the table below we can see how SPY performed preceding the 3% or more gap.

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SPX recent move.

SPX has been pretty volatile lately. Here is a comparison of the last time SPX drop since the high back in October.

The number of stocks that made a 52 week low today are almost at the same level as last drop(-60 vs. -68). The drop in percentage points is still far from the last drop (currently -4.67% vs. -9.84% in October).

The McClellan oscillator is currently below the last bottom reading at (-259 vs. -212).

Looking at key events this week (FOMC & expirations) as well as the market internals and the time of the year, I project that SPX will start turning around and accelerating its move higher into the end of the year. I do not expect SPX to make any new highs this year but I foresee it to be finishing between 2040 and 2060.