BTIG’s Krinsky Expects Tuesday’s “Gap” Will Be Filled

BTIG’s Krinsky expects Tuesday’s ‘gap’ will be filled

A gap occurs when a stock or index suddenly moves up or down typically on catalysts outside of trading hours. These gaps can “fill” when the price moves back to the pre-gap level.

“When there is market moving data, whether a single stock’s earnings release, or a macro report like CPI, it’s always the market’s reaction to the initial reaction that is most important,” Krinsky wrote in a Tuesday note.

Stocks pared their gains after an initial rally following a lighter-than-expected inflation report. The Dow Jones Industrial Average was last up 138 points, or 0.41%. The S&P 500 added 0.86%, while the Nasdaq Composite rose 1.22%.

Earlier in the day, the Dow was up more than 700 points. At session highs, the S&P 500 and Nasdaq Composite were up 2.77% and 3.84%, respectively.

″[So] far the high of the day in futures came right around 8:30. This also leaves a massive gap on the chart in SPY. Not all gaps get filled, but most do,” Krinsky wrote. “To be fair, there are also unfilled gaps above from August at 425.50 and 421.22. Eventually those are likely to get filled, but our thinking is today’s gap gets filled first.”

—  CNBC’s Sarah Min