Happy July Gappers!

As of 9:10 am ET, indices are showing extremely large gaps "down" pre-market in the D-L zones except for the Dow which closed 'up' yesterday and thus is showing a U-L (a.k.a BLUD!) zone gap.

Gap Fade Risks:

1)  Very low historical probabilities/PF for these setups (i.e. these zones, on Fridays, during similar market conditions)

2)  Many high risk patterns for gap fading are firing today:  opening below S1 (and possibly S2), opening below 600 mas on 5 min chart,  prior day formed a shooting star candle pattern for the Dow and S&P (note: ES formed a doji too), etc.

3)  last day prior to a long weekend can generate additional post-open volatility

Gap Fade Positives:

1)  following unfilled "up" gaps in most indices is a positive

2)  fading down gaps on the day of the monthly jobs report, following down days, shows a good win rate and profit factor (though sample size is only about 15)

3)  good profit opportunity relative to risk

Bottom Line:  I am NOT fading today's gaps - as always these gaps could fill, but odds are stacked against it and this one would be much better played AFTER the opening bell.

Have a great 4th!

Scott