After a big opening gap, does it keep running?
When a stock opens 10%+ away from yesterday’s close on earnings, does it keep moving that way into the close?
The answer
After a 10%+ gap up, small caps kept rising into the close 49% of the time: a coin flip. The open already has the news.
7,426 cases tested.
The numbers
| Setup | Kept going that day | Average open to close |
|---|---|---|
| Micro caps, gapped up808 cases | 51% | +1.04% |
| Micro caps, gapped down783 cases | 52% | −0.64% |
| Small caps, gapped up1,422 cases | 49% | +0.01% |
| Small caps, gapped down1,434 cases | 49% | −0.24% |
| Mid caps, gapped up945 cases | 47% | −0.43% |
| Mid caps, gapped down979 cases | 50% | +0.41% |
| Large caps, gapped up527 cases | 50% | +0.12% |
| Large caps, gapped down528 cases | 53% | −0.11% |
What it means for a trader
Chasing a big earnings gap at the open has no edge on average, in either direction. Whatever happens after the open is close to random.
How it was tested
Earnings reports since 2021 where the stock opened at least 10% above or below the prior close. Measured from that open to the same day’s close, not adjusted for the market (a normal day’s market move is small next to gaps this size).
History, not predictions. Not investment advice.