Nasdaq Gap Down After An Already Bad Day
As stocks suffer more of a hang-over from Friday's selling pressure, we're seeing especially acute pressure in technology stocks.
The Nasdaq indexes suffered large losses on Friday, falling to one-year closing lows, and now there are indicated opening gaps of more than -1%.
This is rare, and has only been seen during the last two bear market cycles. Even so, the Nasdaq 100 has had a strong tendency to see a short-term bounce over the next several sessions.
Here are the returns any time QQQ fell -2% or more to a 52-week low, then opened down at least -1%. The returns are from the open of the day of the gap down, through the open of the day three days later.
All 14 led to bounces, though the maximum loss was heavy. It was still far outweighed by the max gain, so volatility was extremely high with an overall positive skew in the short-term. That also ties into the tendency for stocks to rally into mid-week after suffering a bad Friday/Monday combination.