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Number of Up Gaps in SPY ETF at an All-Time High

This year it has gotten more difficult for traders to realize profits from shorting the market due to a high number of up gaps.

I posted this chart in Twitter yesterday that many liked:

The chart shows the number of up gaps in SPY ETF that are not closed during the day (low of the day higher than the high of the previous day) in a 252-day rolling period.

It may be seen that the last count of 28 is an all-time high. In May 1995 the count reached 25 and stocks rose 30% in the next 12 months. Obviously, this does not mean that the outcome needs to be the same this time.

Under this price action dynamic, shorts are forced to withdraw and price action is mostly driven by the upward longer-term bias.

Like any other price action dynamic, this one could also suddenly go away but in the meantime it has inflicted considerable damage to short traders.


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