Opening Gaps Jump Up to Get Beat Down

When it comes to markets which are pulling back, be it a deeper correction or simply a mild dip (the current market fall into either category at this point despite the sizable drop on the indices yesterday), it is often said that opening gaps higher are faded the majority of the time. 

And as I write this, we are seeing just that: A triple-digit rally on the Dow to kick off the session is now a triple-digit loss, with bonds still a safe have and the VIX looking like it has some unfinished business higher with the potential for some real fear to come into markets sooner than later.

Mind you, relative standouts like REGN and ZM are wildly impressive. But cherry-picking a standout name here or there is insufficient evidence to declare the end of this pullback, even if it is merely a bull market reset after a strong broad-market rally. 

Furthermore, the small caps in the IWM ETF are leading lower this morning by a wide margin, which is one of the first observations we made with Members off the opening bell.

After flashing so much promise in recent weeks for a potential bull marker rotation, seeing IWM fall on its face this week is certainly enough to give me pause and retreat into a defensive posture until further notice.