My pre-market comments:

"As of 9:10 AM EDT, the indices are showing small gaps down in the U-CO and U-OL zones.

Risk Factors

• Unique Pattern: 6 consecutive higher daily highs, when below the 200 DMA and using MTG stop parameters: Longs: 1/5 and .1 PF, Shorts: 3/6 and .8 PF historically.  Regardless of 200 DMA, gaps following 6 higher highs: shorts: 18/32 and .9pf and 15/21 for longs and 1.4 pf

• Special Day: Wednesday of Options Expiration weak is historically weak for fading down gaps: 31/61 wins and .75 PF (using MTG stop parameters), but OK for "up" gaps (33/56 and 1.4 PF). NOTE: I tested a wide range of special studies for Wed of OpEx after multiple higher highs, etc and all showed consistent weakness on for fading down gaps.
  

Supporting Factors

• Gap Guides: if gapping UP, most indices show a very good setups today in the U-H and U-HC zones, and if DOWN in the U-CO zone, the Gap Guides show OK win rates and profit factors for most indices
• Supportive Patterns:   prior day unfilled gap up is a positive for either direction and if gapping down, opening above high of 2 days prior is positive oo
  

Bottom Line:

Wednesday's setups are good for a gap up and OK for a gap down if opening in the U-CO zone, but down gap risks on Wed of OpEx is a big concern and size should be reduced IMO.  TRADE AT OWN RISK! Scott"

Gap Wrap

The risks to today's small gaps down were clear, but so were the positives. With the majority of indices showing decent setups today in the U-CO zone, it met my criteria for fading the open ... so I thought.

In reality, I made a significant mistake in my analysis prior to the open: I did not notice the Nasdaq futures trading ABOVE yesterday's closing prices. (No it was not because I was sipping on a Bloody Mary - though that is my favorite beach drink). Working off of my laptop, the space is limited and my quote window with the NQ was just below my screen space and I missed it. DUMB.

Execution errors can be very costly and this is one of my standard "pre-flight" checks to borrow an expression from my avaitor days. Had I noted the NQ gapping up, it would resulted in "no trade" for me today, since I only fade small gaps IF they are all gapping in the same direction.

Fortunately, with confluence of various resistance around the gap fill area showing on the Price Guides, my plan was to close the entire position just in front of gap fill.  After the open, prices rallied and closed me out of some of my position and then sold off a little without actually filling the gap. Realizing my analytical mistake, I tightened my stop to the lows of the day and was stopped for a net scratch trade for the day.