What’s the Chance the Market Closes Lower After a Gap Down?

Gaps are a common feature in financial markets, and traders often wonder what happens after a gap down at the open. Does the stock market usually keep falling, or does it bounce back during the day?

There is a 47% chance the market closes lower after a gap down.

Using historical data, we looked at all trading days where the market opened at least 0.1% lower than the previous day’s close for the S&P 500—a gap down. We then measured whether the close of that day ended up higher or lower than the open.

Here’s what we found:

• In 53% of the cases, the market closed higher than it opened—meaning it recovered during the trading day.
• In the remaining 47% of cases, the market closed lower than it opened, continuing the downside momentum.

What Does This Tell Us?

The odds are nearly even, but slightly tilted toward a bounce. This suggests that a small gap down is not necessarily a bearish signal for the rest of the trading day. In fact, more often than not, the market manages to recover from the weak open.