It’s been my day job, for several years now, to follow markets. Each tick, headline, or bar on a chart I’ve followed absurdly closely. Probably too closely. I like to think that after spending that much time in markets, after all these years, I can share a unique observation or two.

Watching markets since the crash in March, the one that sent stocks whooshing limit down into a sea of red, I’ve noticed that after-market trading has been responsible for the biggest moves. I’m talking about the gaps up and the gaps down. The moves that occur when normal market hours are closed.

Here’s a chart:

Each arrow on the chart above represents a moment when the market, as gauged by the S&P 500 index, has either gapped down or gapped up in a significant manner. Meaning it opened way higher or way lower than where it closed at the day before. The chart shows how volatile these gaps have been. It shows how some of the biggest moves have been influenced in the hours when the market is theoretically closed.

I can’t say I’ve ever seen a time in markets with this many gap ups and gap downs, and I imagine someone out there will read this and crunch the numbers. A friend told me that, based on his analysis, more than 80% of all gains and losses in this market have happened in hours of trading when the market is technically closed. 80% of all gains and losses! Mind-boggling.

Most traders and investors, especially in the retail space, follow markets during normal hours. That is 9:30 AM ET to 4:00 PM ET. What’s happening in this market, though, is almost the opposite. All the activity is coming from hours that very few people actually participate in.

I don’t see this ending any time soon. As I write this, it’s actually happening again, markets are gapping way up. A mentor of mine, way back in the day, would tell me that the market never actually closes, it just separates a few people from everyone else. It’s why he’s been a proponent of 24 hour markets since before I even knew what a call option was… That’s for another blog post, though.

Watching markets in 2020 has been a reminder that not enough people really understand what happens when markets are closed. In times like this, it’s never been more clear… It’s not your market, it’s someone else’s, and they’re making moves when most people are asleep or logged out.