Newsletter 04/03/2025

Quote of the day: "So much has been given to me I have not the time to ponder that which has been denied" - Helen Keller

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Good Morning!!!

I analyzed SPY Gaps Down >= 3%, 2004-Present _{using polygon which may be flawed}

Key findings:

• Frequency: 16 distinct trading days since January 2004 where SPY opened 3% or more below the prior day's close. These rare events often cluster around major market stress periods (e.g., 2008 GFC, 2020 COVID Crash). The gaps ranged from just over -3% to a severe -10.45%.

• Intraday Bounce (Open-to-Close): Performance after the gap open until the close was essentially a coin flip. 50% of these days closed higher than their open, while 50% closed lower. The average Open-to-Close return was +0.37%, but the median was slightly negative at -0.08%. This suggests no reliable bullish edge from the open price on these days.

• Intraday Recovery (Low-to-Close): While the O-C performance was mixed, the market did typically bounce off its absolute intraday low by the close. The average recovery from the day's low was +1.90% (median +1.00%), indicating buyers tended to step in at the lows.

• Closing Green vs Previous Close (Full Recovery): This was perhaps the most stark finding. Despite the intraday bounces, closing positive compared to the previous day's close after opening down 3% or more NEVER happened in these 16 instances.

• Forward Returns (Post-Close):

• 1 Week: Highly volatile and uncertain. Average return was +0.37% (median +1.92%), with only 56% closing positive. The range was wide (-12.5% to +11.3%).

• 1 Month: A stronger positive tendency emerged, but still very volatile. Average return was +2.08% (median +4.21%), with 69% closing positive. Range: -25.0% to +17.3%.

• 1 Year: Historically showed very strong positive returns, suggesting these events can occur near longer-term bottoms. Average return was +31.11% (median +28.33%), with 87% of comparable instances positive (N=15, as 1yr data isn't available for the 2024 event yet). However, the risk remained high (worst return: -36.7%).

Here is all of the data for you. Seeing the market gap down sharply can be unsettling, especially for people who are worried about retirement accounts, the state of the market, etc. For perspective: If you are at or near retirement age, consider having sufficient cash reserves (perhaps ~2 years of expenses) readily available to avoid selling into sharp downturns.

It's also worth remembering that while these high-volatility times aren't "fun," they have happened before and WILL most likely happen again. The good news, historically, is that significant market dips have eventually been recovered, provided one's timeline is long enough.

Regarding this specific analysis (SPY gaps down >= 3%): While it historically presented a 50/50 chance of an intraday bounce from the open price, it never resulted in a full recovery to close green compared to the previous day in the 16 instances since 2004. The forward returns show a tendency towards positive outcomes over longer horizons (1 month, 1 year), suggesting these can be longer-term buying opportunities. As always, historical data provides context, not guarantees. 🙂 I would say that the furthest most right column may give you some comfort.

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SPY –

Small Caps: Volatility has been high, but the opportunities have been solid. Yesterday saw quick early moves—hoping for more of the same today.

PTIX up 170%— No bias at the moment. 10-K confirms April 28th they have to meet bid price but no update on stockholder equity. They said they are projecting to run out of cash BY q3.

APVO up 110%—zero cash left. These get pushed hard, but when they unwind, it’s brutal. No interest in longing.

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GOOD LUCK AND BE SAFE

H.H

_{“Hazard Zet Forward”}

_{PLEASE READ: I am doing this because I love the community and enjoy talking about stocks. I have a right to talk about stocks and I’m going to do just that. Nothing is advice. I am not a financial advisor. This is not advice (seriously, i mean it). I am not a pro. I could be buying or selling any ticker mentioned at any time. One more time - I could be buying or selling any ticker mentioned at any time. I will do what I want and I want you to do what YOU want. Any money made / lost is the result of your personal decision - “Daily Newsletter” “Hugh henne” “Mitch Hennessey” or anyone / anything connected to any of those are not liable.}