Since I am on vacation this week and was playing golf this morning, I posted these pre-market comments last night:

"Hello Gappers! 

As of 9:10 AM EDT, I am hopefully lining up a birdie putt at the Thistle G.C. in Calabash, NC... but here are my thoughts based upon today's Gap Guides (as of last night)

Risk Factors

• Gap Guides: assuming a gap DOWN, the Gap Guides show average/neutral win rates and profit factors for most indices for the U-CO zone and generally weak / poor win rates and PFs for the U-OL and U-L ("BLUD") zones
• Unique Pattern: 5 consecutive higher daily highs, when below the 200 DMA and using MTG stop parameters: Longs: 3/13 and .2 PF, Shorts: 5/9 and .9 PF historically.  Though sample size is small, a long certainly looks risky at the open.
  

Supporting Factors

• Gap Guides: if gapping UP, most indices show a very good setup today in the U-H and U-HC zones
  
• Supportive Patterns:   if gapping UP: multiple (5) successive higher highs and higher lows is generally a positive for fading
  
• Unique Day: fading UP gaps on the Tuesday of Options Expiration week after Monday closed higher is OK: 21/33 wins and 1.6 pf  (note: down gaps: 25/39 and .9 pf)
  

Bottom Line:

Tuesday's setups are pretty straight-forward: gapping up looks promising for a fade and a gap down looks too risky IMO. TRADE AT OWN RISK! Scott"

Gap Wrap:

Today's setups looked pretty good in the early morning hours, but deteriorated as prices climbed above R1 in the ES (opening above R1 is a risk factor for up gaps). Plus, the size of these gaps ended up being quite large - in fact they were greater than 40% of the 5 day ATR - a risk factor in itself as I have discussed many times previously in gap wrap videos. In addition, very large U-H gaps during bear markets (<200 DMA) are unusually risky too as speculative buyers and panicking short sellers buy the opening.

Still, the Gap Guides showed attractive setups from a profit expectancy point of view and there were some positives too. So, I stuck to my rules, adjusted position size for the risk factors noted, and shorted the ES. And I was stopped for a loss. And 'no' I did not make a single birdie today either.

Though all losses are disappointing, this was not a total shocker for the reasons noted above, but I will admit that I thought these were going to work out in my favor.

If you were stopped out today, it may be harder to step up to the plate and fade the gap again tomorrow if the odds are favorable. But that is what I will do. Will you?